What is Lead to Cash? Definition and meaning
Lead to Cash (also Lead-to-Cash or L2C for short) describes the complete business process that turns a prospect into paid revenue. The term spans the arc from the first point of contact (the lead) through quotation, order and service delivery to incoming payment (the cash), and thus treats sales, fulfilment and accounting as one connected chain.
The value of this view lies in its continuity. When the individual phases are handled in separate systems, media breaks arise at every handover: the lead from the CRM is re-entered for the quotation, the order travels by email into fulfilment, and the invoice is then created separately again in accounting. Each of these breaks costs time and creates room for error. The goal of Lead to Cash is to close these handovers.
The phases of the lead-to-cash process
The process can be divided into successive phases that are meant to mesh seamlessly:
- Lead and sales opportunity: a prospect is recorded, qualified and assessed as a sales opportunity.
- Quotation: from the opportunity a quotation is created with services, prices and terms.
- Order: if the customer accepts, the quotation becomes an order, without re-entering the data.
- Service delivery: the project is carried out, and times and effort are booked against the order.
- Invoice: the services rendered are turned into an invoice.
- Payment: incoming payment is monitored and open items are followed up.
What matters is that information is passed on from phase to phase, rather than being recreated at every boundary.
Lead to Cash versus Order to Cash and Quote to Cash
Alongside Lead to Cash, two related terms are in common use, each referring to a shorter section of the same chain. Order to Cash (O2C) begins only at the received order and reaches through to payment, so it leaves out the sales phase. Quote to Cash (Q2C) starts one step earlier at the quotation. Lead to Cash is the broadest of these terms, because it additionally includes lead qualification in sales.
In practice, all three describe the same desire for a seamless chain; they differ only in the point from which they view it.
Lead to Cash with end-to-end software
The lead-to-cash process only becomes seamless when CRM, quotation, order processing and invoicing work on the same data foundation. A sales opportunity then becomes a quotation in a few clicks, the accepted quotation becomes an order, and the services rendered become an invoice, without customer, line-item or price data being re-entered along the way.
This is exactly the connected flow that order processing from projectfacts maps, bringing the path from lead to payment together in a single all-in-one software.