What is a Quotation?
A quote is created and issued before any work is done or products sold. It is a formal estimate that indicates the dollar amount for the products or services needed and it ensures that you only owe that amount (not a completely random number) for the products or services. It can be verbal or written.
A quote is often valid for 30 days from the date we issue it. But, it can be adjusted or revised upon a customer’s request. Issuing a quote does not change the inventory. This is because the work or product is not fulfilled yet. You can Request for Quote (RFQ) from different agencies and respond to your desired RFQ with a Purchase Order.
What is an invoice?
On the other hand, an invoice is a detailed list of products that have already been sold or services that have already been completed. Aside from the list, the invoice also includes dates as to when the products were sold or the services were completed, along with the dollar amount owed for each line item, and the total amount that is owed from the customer.
When you’re looking for work to be completed or products to purchase, a quote would come first, then the job would be completed, and an invoice would follow. After the amount on the invoice is paid, a receipt would complete the business transaction.
First the quotation, then the invoice
Let’s say you have a car repair business. The cold and wet UK winters can have an impact on any number of things in a vehicle. Dead batteries, weak spark plugs, not to mention the fender benders that can occur with just a little ice on the road.
The cost of repairs for a vehicle can quickly skyrocket, so it’s typically not common for someone to drop off their car to be fixed then pick it up and be presented with a hefty bill. In these situations, a quotation is the document needed.
A quotation provides your customer with an outline of what will need repairing and the total costs for the work to be done. The quote can then be approved, amended or refused by the customer before actual work commences.
Elements to include in your invoice or quotation
Document number
Document date
Quotation/Payment due date
Contact information
Itemized list of Products or Services
Dollar amount for each item line
Information about Taxes and Fees
Payment terms
Discount (if any)
