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December 27th, 2022 (Updated 01/06/2023) | 9 min. read

Quote to Cash vs CPQ: What’s the Difference? 

Let’s face it; using Excel spreadsheets to manually create your B2B quotes is history. And if it is not, it certainly should be. After all, why would you risk slowing down the quotation process by keeping a complex, outdated, error-prone and convoluted system in place full of one-off workflow approvals? Especially if there are modern and automated options to choose from. Large-scale business organizations just like yours require a quotation process better than what is available using Word or Excel. When companies create quotes, both Configure Price Quote (CPQ) and Quote to Cash (Q2C or QTC) offer many advantages over traditional tools, allowing businesses to be more consistent, accurate, and error-free with their sales processes and permits businesses to compete more effectively with other organizations and make more sales. But which one is right for you? (it might even be both) – let’s examine ‘Quote to Cash vs CPQ: What’s the Difference?’ in this article. 

At Pricefx, we are perfectly placed to take an in-depth look at the differences between Quote to Cash and CPQ, as for more than 10 years now, we have been combining CPQ software with our award-winning suite of 360-degree pricing solutions. We answer questions every day from our prospects and clients alike about the difference between CPQ and Q2C software. The terms CPQ and Q2C are often used interchangeably. However, they do not have the same toolsets or processes. Where does one stop, and is there overlap between the two? 

Let’s first analyze exactly what CPQ software is and does before we move on to its role in the Quote-to-Cash process before drilling down into the difference between CPQ and Q2C software.  

What CPQ Software Is & What it Does 

 As mentioned above, CPQ stands for configure, price, quote. CPQ software offers an integrated system that supports the configuration, pricing, and quoting process. Many CPQ systems are also incorporated with pricing software, quoting generators, automated approval workflows, reporting, and analytics. 

Configuration, pricing, and quoting is widely used across both B2B and B2C sales. It can allow you to configure or make standardized quotes, and then price products and services through integration with your ERP (Enterprise Resource Planning), your Customer Relationship Management platform (CRM) tools or other in-house systems you may have and is used to create a standardized and compliant quoting process for your business. The CPQ software assists in preparing your quote, sending it out to the customer, and analyzing your data. 

As a powerful, user-friendly sales tool, CPQ shortens the quoting process while reducing the time spent by your sales team on performing administrative tasks. 

 

Remembering previous quotes for similar customers and similar product types, when combined with a powerful pricing software solution, CPQ offers optimum prices with automated workflow approvals, and suggesting product combinations for upsell and cross-sell opportunities (and much more), CPQ software provides business organizations with the opportunity to improve their quote response times, increase sales win rates, and drive overall revenue growth. 

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As a powerful, user-friendly sales tool, CPQ shortens the quoting process while reducing the time spent by your sales team on performing administrative tasks. 

 

Remembering previous quotes for similar customers and similar product types, when combined with a powerful pricing software solution, CPQ offers optimum prices with automated workflow approvals, and suggesting product combinations for upsell and cross-sell opportunities (and much more), CPQ software provides business organizations with the opportunity to improve their quote response times, increase sales win rates, and drive overall revenue growth. 

 

Long story short, CPQ Software makes your quoting process easier, faster, and more organized.

 

Use CPQ to streamline the entire contracting process, allowing your salespeople to do the following things:

  • Create multiple quotes quickly and efficiently
  • Track prospect and customer information within your CRM
  • Tailor contracts and sales quotes to individual customers
  • Eliminate user error by drawing from reliable data sources to auto-populate fields

 

When used together with the informed insights of an Artificial Intelligence price optimization tool offered as a part of a total 360-degree pricing software solution, CPQ software transforms the sales department to become more profitable and give back more time your sales team to do what they do best – sell.

 

And with the ‘configuration’ part of the CPQ equation, the more complex, the greater the number of parts, accessories, options or the more features your products have, the more CPQ can assist your salespeople to become targeted ‘super sellers’ by customizing quotes easily and quickly.

 

Since CPQ contains a bill of materials produced during the configuration, it provides a list of any modifications that are needed. This list helps reduce production errors and make sure the customer gets precisely what they ordered. 

When paired together with an AI-informed pricing software solution, intelligent CPQ software uses price optimization to determine customer buying patterns, to identify what your customers are willing to pay and to establish a value-based pricing strategy.

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What Quote to Cash is & What it Does 

 Quote to cash (Q2C or QTC) encompasses everything that happens from the time the customer decides to purchase your product until receiving the revenue from the sale.  

Having a full Q2C sales process will also allow your customers to have a great buying experience. It will help define the impression they have of your organization, your sales team, your products, as a complete, integrated, and professional service. 

A quality Q2C process speeds up the sales process and helps you realize sales revenue faster.  

In other words, Q2C software covers your entire sales process end to end. 

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Quote to cash software can assist business organizations to improve and automate the processes that exist between the buyer’s intent to purchase and the finalization of the transaction.  

Are CPQ Software & Quote to Cash the Same Thing? 

In a word, no, but they do work together well. 

Looking at the image above, CPQ software represents the Configure – Pricing – Quoting part of the Quote to Cash process. 

In other words, CPQ is only a subset or a part of the Q2C process. 

CPQ’s Role in the Quote-to-Cash Process 

Quote-to-Cash is the end-to-end sales process, starting with a customer’s intention to buy and ends with the customer paying for the product. It includes several integrated activities for the vendor, including lead management, pricing, quoting, negotiating, contracting, billing and even renewing orders. 

An organized Quote-to-Cash process allows companies to plan accurately all the integrated vendor activities. 

 

It also ensures that each sale is accurately priced, quoted and executed to ensure financial success including all the parts of that process (the quotation and pricing of a CPQ solution are only a part of a multi-step Quote-to-Cash process that begins with lead management and ends in automated order renewal).

Businesses with a ‘broken’ quote-to-cash process usually experience many customer credit notes being issued due to price error (or a large percentage of revenue going into “Invoice Query” due to pricing errors). And for every dollar given as a credit for overpricing, you can bet you gave away another dollar in underpricing. 

A CPQ solution connects salespeople and service delivery stakeholders during the sales process. Through that connection, the organization can provide more accurate pricing and quotations. As a result, the team enjoys better transparency and accuracy in pricing estimates and in configuration requirements, allowing them to optimize margins and maintain and improve delivery timelines, resulting in greater customer satisfaction.  

CPQ can speed up sales cycles, improve sales win rates, accuracy, and provide the added benefits of workflow rules. For pricing, CPQ powered by the price optimization of pricing software provides visibility into price changes and makes it easier to update pricing, and as a result, accurate quotes get into the hands of your customers faster. 

Consequently, CPQ software acts effectively like an important and beneficial add-on or a subset of the total Q2C process, providing salespeople with the ability to keep customers happier and more likely to renew or extend contracts with your organization.  

More Differences Between CPQ and Q2C 

Q2C adds processes and features to CPQ: Q2C includes the configure, price, and quote process that is mentioned above, and also covers additional areas of the total sales process such as contract negotiation, invoicing, payment, renewals, and when required, contract renegotiation.  

Q2C provides a more extensive set of business processes that takes your business all the way from preparing an initial offer through to collecting payment. In addition to configure, price, and quote found in CPQ, the quote to cash process can potentially add contract renewal, ordering, and supply chain management to your total process. 

CPQ can be easier to implement: It can be easier to implement a simple, non-pricing software optimized CPQ software solution instead of a full-blown Q2C solution. These systems can require substantial changes to a business, but less so than Q2C.  

Bear in mind, if you are going to include CPQ software as part of a total pricing software solution that will include extensive implementation steps. 

Which CPQ Software is Best for My Salespeople & to Include in My Q2C? 

Now you know the difference between Q2C and CPQ software, you may be looking to add advanced CPQ software to your Q2C process to streamline your quoting procedures for your salespeople and customers alike.  

You may already know if software like the award-winning CPQ of Pricefx or similar is something that can help your organization achieve its business objectives, but you would like to make sure. 

See the list below for 6 of the best price CPQ software tools available (other than Pricefx) in the marketplace today and how they stack up:

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However, to dive into in-depth reviews of the CPQ software solutions listed above (and how Pricefx compares), check out the handy article below:

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Alternatively, if you have already compared the CPQ options for yourself and have decided that Pricefx CPQ software is exactly what your organization is looking for to streamline your quotation procedures, contact one of our team members now: 

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About the Author 

Iain Lewis has worked in pricing as a practitioner for 27 years working at Automotive, industrial goods, business services and Distribution companies. Iain brings his unique perspective to each engagement to guide companies through complex buying decisions and has helped companies throughout Europe and South-East Asia continue to improve their pricing approach.