It is commonplace in business when engaging in buying and selling to receive documents after your sales or purchase. One way or the other you must have received a document or documents.
But have you ever wondered, what is an invoice and a quote? What is contained or should be contained in each one of them? When can I use either of them? This guide will provide you with that information.
Firstly, what are an invoice and a quote?
An invoice is a form of a document or in some cases a paper slip given to the buyer by the seller which shows a request on it for payment of a legal tender or otherwise.
Details inside the invoice are not negotiable as it is the final document after purchases. A proforma invoice is very similar to an invoice although similar in function to a quote too. But while a quote looks like a letter, a proforma invoice looks just like an invoice. It has popular usage when it comes to shipping and delivery.
A quote is an estimation document issued to the seller to the buyer or customer. Depending on how the customer likes it or wants it, a quote in negotiable. After the quote is signed, a Performa invoice is created and the customer signs it.
A quote also shows an estimate of the products and services needed for a particular job and how much it would cost. In many cases, a quote could be in either a verbal form to arrive at a verbal agreement or a written form. It protects the interest of the customer because you know exactly how much work is going to cost you and it protects you from fraudulent vendors.
It is important to note that a quote doesn’t change your inventory number as nothing has been a purchased but then reverse is the case when an invoice is sent. It is important to note that in most cases a quote is valid for 30 days from the day it was issued, and contents can be updated as at when required with the consent of the customer.
What is contained in an invoice and a quote?
An invoice should have
– the quantity of product or products
– prices and discount
– Date of the invoice issued
– invoice number
– Total amount to be paid
– signature of both seller and buyer.
A quote should have
- Name of the company
- Phone number or numbers of company
- The quotation numbers
- Some important details of customer
- Product description
- The code number of items
- Purpose of quote
- Quote total amount
- The discount amount if any
- VAT rate
- The validity period of the quote
More information about this can be found here: https://www.gov.uk/invoicing-and-taking-payment-from-customers
When do you use an invoice and a quote?
Most times you would need an invoice once a service has ended which shows the list of goods and services which was provided and the price it costs.
A quotation is usually given out before any service has been delivered or rendered. It also shows a list of the expected costs. Quotations should be given out in a manner that is as clear as possible and includes all the costs that are required to render the service including the cost of labor, materials used, parts bought or replaced and other possible problems that may come that requires handling.
A customer has the right to negotiate as regards other quotes he may have received in the past with the current quotation prices. Quotations should be as clear and honest as possible.
It is important to note that many applications are available which can create quotations and when accepted quickly convert it to an invoice. Smart tools like Quikflw can convert quotations to invoices in just one click, which saves you some valuable time and keep all things organized.
So, with the information provided here, you should be able to clearly identify an invoice and a quotation and know just how to use each of them in order to boost the efficiency of your business.