How much impact does a long delay between the delivery of projects and receiving customer payments have on your business?
Do you have a grasp of the cash flow and higher cost impacts due to manual processes and disconnected systems at each stage of the service delivery lifecycle? Getting paid in a timely manner within a professional services business is far more complicated than just capturing hours and sending out an invoice. It involves bridging the gaps between receiving the data from staff, making corrections (possibly involving additional staff input), calculating each customer’s proper billing rate(s), calculating the proper costs (including overtimes or other labor factors), and then entering the final data into the billing system...How much time does all of that take? How many people do you have to involve in the process?
Executives in best-in-class service delivery operations understand that implementing a Quote-to-Cash (“QTC”) system is the most efficient way to ensure speedy and accurate payments from customers. Previously, introducing PSA (Professional Service Automation) capabilities to integrate with your ERP/Accounting system and CRM system was time consuming and cost prohibitive for most companies. Many business leaders found they did not have technology in place to capture the necessary transactions and were forced to manually track and then batch the data - which could take days or weeks to reconcile, resulting in inaccurate, incomplete, and possibly out-of-date billing information. Imagine waiting 7 weeks to get paid or frustrated customers wanting answers about work that was done 6 weeks earlier? Who can remember?
Today, implementing a QTC system and structure is not simply “nice to have” - it’s a necessity. Companies with a seamless and technology-based QTC model find they have the ability to accurately plan resource needs, create realistic revenue projections, develop accurate project budgets and manage the business with the right information at the right time.
Companies with a QTC system also report higher customer satisfaction and a reduction in overall operational overhead. The ability to calculate profitability early in a project and proactively adjust in “real time” clearly creates a competitive advantage.
What are the pitfalls or challenges with implementing a QTC system? The process is challenging for companies who may have very little or low cross-department communication currently in place. This culture change can often be the biggest challenge to overcome. Departments are often competing for resources, have no standard procedures or service delivery disciplines, use less than adequate technology or none at all. All too often, systems and processes that should exist at the department level are created down to the individual level to compensate for missing technology.
So what does this all mean? For companies that can successfully make the technology and cultural change, the payoff is monumental. According to several recent studies published by Service Performance Insight (PSI) and the Technology Services Industry Association (TSIA), companies that fully integrate Customer Relationship Management (CRM), Professional Services Automation (PSA), and Enterprise Resource Planning (ERP) as one connected system find gross margins for their Professional Services businesses to be 12% higher, plus revenue growth increasing by as much as 48% and higher over a three-year period. And the annual revenue generated per consultant can increase by 18%.
Would numbers like this be a positive impact on your business?
Want to learn more about how to implement an effective QTC system for your business? Don’t miss “Learn How a Quote-to-Cash System for your Service Operations can Improve Business Profitability” presented by TimeLinx Software, Inc. at this year’s Sage Summit on August 16 in Nashville. Register here.