Your design needs to do certain things; some of which have been done before and are just a matter of reviewing heuristics and leveraging the necessary pieces. And then there are the new concepts and ideas that need to be flushed out via prototype. Typically, these new ideas are where your company stands to grow the most.
To the right I have charted the design process in relation to the general development process. This example is a macro cycle. A much more compressed timeline can be applied to smaller portions of an overall design. If your team uses the scrum development process, then this might be what each sprint looks like.
Sometimes a flat screenshot just isn't enough to tell the story of your design. If this is the case, you can accomplish quite a lot in the design process by creating low fidelity prototypes. This technique can be used at any point in the design process, from a set of "click throughs" in PowerPoint to a mapped HTML demo of the product's workflows. Microsoft's Sketchflow, an extension of Expression Blend, is a great new tool that allows stakeholders to give you written feedback while they are reviewing your prototype.
Once your team feels like they have a testable concept, it is time to get some of your customers in front of the experience to see if it is accomplishing your collective goals. Each company has a different approach and timeline when it comes to usability testing. However, the one thing that remains true accross all design processes, is that it is cheaper to find errors and fix them before development begins than when it has begun. A single pattern out of place in a prototype may take two design hours to rectify and prepare for a retest. However, if that pattern has been wired up and is in development, it may come with a heftier price tag to rework it. And, the cost of repair is magnified even greater if the error is not caught until after your product has shipped to the public. The earlier we test, the better customer experience we can create.