SAP Quote to Cash (QTC) refers to the end-to-end business process that encompasses the entire sales lifecycle ecosystem. The quote to cash cycle in SAP starts right from the creation of a sales quote for a product or service and ends with the receipt of payment for the delivered goods or services.
This process typically involves various stages and activities, including quotations, order processing, contract management, pricing, billing, revenue collection, allocation, and documentation. The goal of the quote to cash process in SAP is to integrate, streamline, manage, and improve upon the various processes of the sales lifecycle, from initial customer interaction to the final revenue recognition.
By harnessing the capabilities of SAP MM, businesses can gain better control over procurement, inventory management, and vendor collaboration. This ultimately drives cost savings and improved productivity.
In this article, we look at the key considerations, processes, and benefits involved in implementing the SAP MM module. The post also sheds light on the transformative potential it holds for organizations
How does the Quote to Cash process in SAP work?
QTC in SAP ensures that products or services are delivered efficiently and correctly to customers as per specified timelines, and that the associated financial transactions are properly recorded. This leads to improved customer satisfaction, efficient operations, and accurate and transparent financial reporting and governance.
Here’s a step-by-step overview of how the QTC process in SAP works:
1) Offer Configuration & Quotation creation: The process begins when a potential customer requests a quote for products or services. Sales representatives use SAP’s Sales and Distribution (SD) module to create a sales quote. They input the customer’s requirements, select the relevant products or services, and specify the requisite quantities. It is key to make this quotation quick and error-free.
2)Pricing and Discounts: Within the SD module, SAP’s pricing engine calculates the total price based on various factors such as product pricing, discounts, customer-specific pricing agreements, and any special conditions. This ensures accurate, fast, and consistent pricing across different sales channels.
3)Order Management & Fulfillment: Once the customer approves the quote, the sales representative converts it into a sales order. The order includes detailed information such as the selected products, quantities, pricing details, delivery dates, and terms and conditions.
4)Contract Management: In cases where long-term contracts are involved, SAP’s Contract Lifecycle Management (CLM) module can be used to manage contract terms, conditions, renewals, and amendments. This ensures that the agreed-upon terms are accurately reflected in the sales order.
5)Inventory Check: SAP’s inventory management functionality checks product availability against the sales order. If products are in stock, the system reserves the necessary quantity of the same. If products are not available, the system can trigger the necessary procurement or production processes.
6)Shipping and Delivery: SAP’s logistics and supply chain modules manage and orchestrate the entire shipping and delivery process. The system generates picking and packing lists, coordinates with warehouses, and tracks shipments. Delivery schedules and methods are communicated to customers.
7)Billing: After the products are shipped or services are delivered, the billing process begins. SAP’s billing module generates invoices based on the sales order information, pricing, and terms. Invoices can be tailored to include relevant details and payment instructions.
8)Payment Collection: SAP’s Accounts Receivable module handles payment collection. It tracks customer payments, updates accounts, and generates reports on outstanding balances. Various payment methods, such as credit cards, checks, and electronic transfers, can be accommodated into the system.
9)Revenue Recognition: Accurate revenue recognition is crucial for a company’s financial reporting integrity, as it reflects precise profit and loss numbers and helps in financial forecasting and revenue projections. For organizations that have to adhere to accounting standards like IFRS 15 or ASC 606, SAP’s revenue recognition functionality ensures that revenue is recognized according to a proper process, based on delivery or completion milestones. This aligns financial reporting with the timing of revenue generation.
10)Reporting and Analytics: Throughout the quote to cash process in SAP, reporting and analytics tools are effectively used to monitor key metrics, track sales performance, analyze customer behaviour, and identify process bottlenecks. These insights help organizations make informed decisions and optimize their operations.
11)Integration: One of the key strengths of QTC in SAP is its integration. Data entered at various stages of the process flows seamlessly between modules, minimizing manual data entry, reducing errors, and improving overall efficiency in functioning.
SAP quote to cash is one of the most critical and complex processes that integrate, align, and streamline multiple sets of activities in an organization. The terminology and specifics of QTC in SAP can differ based on the organization’s practices, needs, size, industry, and its business SAP system configuration.
The following diagram illustrates the new age, rapidly evolving SAP quote to cash process:
BPX at a glance
Headquartered in Pune India, Business Process Experts (BPX) is a key enabler in the process management space, a specialist in providing unique, customized SAP quote to cash process solutions. With offices in UAE and other prominent Indian cities, the company was established more than a decade back in 2012. Since then, it has made giant strides and has grown steadily to become a market leader in the SAP quote to cash process solutions landscape.
Led by a professional and experienced team of engineers, management and finance experts, SAP consultants and problem solvers, BPX and its well-known sister concern YRC are now key strategic, transformation partners for prominent clients worldwide. BPX clientele belongs to key industrial sectors like engineering, automobiles, banks, chemicals, garments and apparel, retail & hospitality, manufacturing, pharmaceuticals, mining, and ITeS.
As your trusted SAP QTC process consulting partner, BPX will seek to understand the dynamics of your organization’s QTC cycle in SAP and customize the entire process roadmap, synced, and aligned to your specific business needs. Our SAP business process experts will handhold and guide you every step of the way, ensuring tangible cost savings and optimal resource utilization and management.
So, if you are an entrepreneur or business owner on the lookout for a successfully orchestrated SAP QTC process implementation, connect with BPX now. We will understand your strategic needs and help you to tap into the various benefits of QTC in SAP, unlocking great value and realizing your true business potential, to help craft your very own success story!
The ‘Quote to Cash’ (QTC) process in SAP can be defined as the critical, complex end-to-end business process that starts with the creation of a sales quotation (quote) and culminates with the receipt of payment (cash) for the delivered goods or services. This business process encompasses various stages and activities involved in the sales and order fulfillment lifecycle, i.e., quotation creation, order processing, contract management, pricing, billing, revenue collection, allocation, and documentation.
SAP provides a comprehensive suite of tools and modules to manage and orchestrate these activities seamlessly. The primary goal or objective of the quote to cash process in SAP is to integrate, streamline, and improve upon the various processes of the sales ecosystem, from initial customer interaction to the final revenue recognition.
The various steps and stages in the quote to cash cycle in SAP can be outlined below:
- Customer enquiry
- Quotation creation
- Quotation review and approval
- Quotation communication
- Order creation
- Order processing
- Fulfillment and shipping
- Payment processing
- Revenue recognition
- Accounts receivable management
- Reporting & analytics
The key benefits or advantages of implementing the acquire to retire (ATR) process in SAP are as follows:
- Efficiency & Automation
- Streamlined and standardized workflows
- Improved customer experience through accurate & timely responses
- Data accuracy and consistency
- Real-time visibility into the QTC process
- Effective and dynamic pricing management
- Optimized inventory management
- Integrated and accurate financial reporting
- Compliance and Control
- Collaboration and Communication
- Scalability and Growth
- Regulatory compliance
- Reduced order to cash cycle time
Quote to Cash (QTC) and Order to Cash (O2C) are both business processes that involve various stages in the lifecycle of a sales transaction. In SAP, these processes are often closely linked to each other and may even overlap, but there are distinct differences between them in terms of their scope of coverage within the sales process.
QTC covers the entire sales process ecosystem, from the initial customer inquiry or request for a quote right down to the payment receipt, encompassing both the quoting and order fulfillment aspects. On the other hand, O2C specifically focuses on the steps involved after the customer places an order, including order processing, fulfillment, invoicing, and payment receipt. It does not include the initial quotation stage.
It’s important to note that the terminology and the specifics of these processes might vary depending on the organization’s practices and the configuration of its SAP system. Some organizations might even use the terms interchangeably or combine the processes in a slightly different way, based on their specific business requirements.