Quote-to-cash (QTC)

Quote-to-cash (QTC) is the end-to-end business process that runs from the time a company creates a quote for a customer to when payment is collected and revenue is recorded. It connects sales, contracts, order management, billing, accounts receivable, & revenue recognition in a single process.

Quote-to-cash is often more complex for SaaS businesses. Subscriptions can change over time with upgrades, discounts, usage-based charges, and contract modifications, making billing and revenue tracking harder to manage. A well-managed QTC process helps carry the agreed pricing and contract terms from the sales process through invoicing and financial reporting.

How Does the Quote-to-Cash Process Work?

The quote-to-cash process typically works;

1. Configure and price the offering

The sales team selects the products/services based on the customer's needs and applies the relevant pricing and discounts before preparing the quote.

2. Create and approve the quote

A quote is prepared and reviewed before being sent to the customer. The quote outlines the offering, costs, and applicable contract terms.

3. Finalize the contract

Once the customer accepts the quote, the agreed terms are documented in a contract.

4. Manage the order or subscription.

The customer’s subscription plan, usage, & contract changes are tracked throughout the agreement.

5. Generate invoices

The customer is billed based on the agreed pricing and billing schedule.

6. Collect and reconcile payments

Payments are tracked against invoices, and outstanding amounts are managed via accounts receivable.

7. Recognize revenue

Revenue is recognized as the company transfers the promised goods or services to the customer, following ASC 606 requirements.

In some contracts, a company recognizes revenue before it has an unconditional right to bill the customer. When that happens, the amount is reported as a contract asset until the billing conditions are actually met.

Quote to Cash vs. Order to Cash

Quote-to-cash (QTC) covers the customer journey from creating a quote to receiving payments and revenue recognition. Order to cash (O2C) is narrower; it usually starts only once a customer has placed an order.

A well-run quote-to-cash process allows SaaS companies to avoid billing mistakes. It provides clearer visibility into cash flow and keeps SaaS accounting accurate. With invoices being sent on time, customers are unlikely to question charges or raise billing disputes.

SaaS organizations rely on subscription billing and revenue automation solutions to simplify the quote-to-cash process. It connects the pricing and contract details across billing, accounts receivable & revenue recognition, thus reducing manual work.