Salesforce CPQ enables companies to automate and streamline pricing. Here’s why that may be beneficial for your organization, as well as a couple of challenges to note, by Eric Borthwick.
As companies’ processes grow more complex, pricing and billing are no exceptions. Historically, companies used manual methods to construct their pricing. But as product and service lines grow, it can become a challenge to configure pricing. Configure, price, quote software helps companies mock up pricing quickly and accurately, basing it on various factors, such as competition and local criteria that affect pricing.
Last year, Salesforce took that efficiency a step further by bringing configure, price, quote (CPQ) directly into the platform. Making the quote-to-cash process native to the platform streamlines the pricing process by bringing all of the information to bear directly into the application that sales reps use. As a result, they don’t have to click, toggle and search for relevant pricing information. Quote-to-cash software with the Salesforce CPQ tool has become a tool for successful pricing management.
Salesforce CPQ allows for process automation, from invoice creation through to the dunning process. With new features, such as the Salesforce artificial intelligence application Einstein, built into its platform, companies can also build logic to predict whether certain payment processes will require certain milestones or more assertive collection practices. The CPQ tool also enables companies to use additional intelligence to tune pricing in accordance with external factors, such as competitor pricing. Effectively, Salesforce is aiming to make ERP software a relationship management tool with integration only needed to move data between systems. Still, while CPQ software may be tuned to customers’ individual milestones, companies need to take care to build billing into their processes carefully. And, of course, while pricing for the application has yet to be made public, it hasn’t stopped demand from the Salesforce customer base.
Managing sensitive collection processes within Salesforce also makes perfect sense. A salesperson with knowledge of ongoing — and sometimes aggressive — payment collection tactics can trigger a pause in marketing and sales efforts. A customer receiving a phone call or email to solicit further business after being told his credit might be affected by the accounting folks is certainly beneficial. Companies with Pardot and Marketing Cloud in place have a head start.
Billing also allows for milestone-based billing capabilities. A professional services company with gated milestone billing could use a mix of free project management applications from the Salesforce AppExchange and Billing to run through engagements with full transparency to accounting to manage cash flow. Many firms whose contracts have clauses including penalties for late payment could automate this calculation, as well.
Since the Salesforce Billing feature will use native Salesforce data and reporting, it may help govern numerous aspects of engagement with customers, such as how future contracts might be tailored given a specific customer’s propensity to pay on time, or even the need to take on additional financing to cover projected costs. Some companies have chosen to include credit limits on the customer opportunity or account record and to initiate dunning processes only when limits exceed specified boundaries.
Managing international contracts with currency exchange safeguards or shielded contracts based on the delivery of a commodity could also be accomplished via Salesforce Billing. Split invoicing also allows for the bifurcated dunning processes that run concurrently for a specific customer or opportunity. Event management is a good example in which a customer might place a deposit on presentation space for a specific event while also purchasing advertising. The advertising space might need to be paid in full to run to print, while the booth might only require a deposit. In this case, the portion of the invoice correlating to the balance on the exhibition space would run through the dunning process on its own.
Billing features also include tax management functions. Tax management can be configured by product or product category or by the shipping or billing address of a customer. Tax exemptions are also available for configuration. Payment processing gateways are also tied in with credit and wire transfer and automated clearinghouse functions are all supported.
There are challenges to implementing an effective billing system. How a company manages the tie back to accounting systems and the interval at which Salesforce is updated with incoming payments is important and should be handled with care. Companies should be careful not to make it more difficult to do business based on workflows or approvals stemming from billing. In many cases, putting salespeople in a position that makes it difficult to continue to engage a customer is a poor strategy. Clear separation of responsibility will go a long way toward success.
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