Quote vs Invoice: What’s the difference between a quote and an invoice and when should you use them?
In this blog post, we aim to give you a clear understanding of the differences between a quote and an invoice. We also will provide answers to the most commonly asked questions on the differences between them both.
Quote vs Invoice
A quote and an invoice are necessary for a business to receive payment.
What comes first quote or invoice?
When it comes to business transactions, the first step is typically to submit a quote. A quote is an explanation of how much a product or service will cost and what the customer should expect from their purchase.
The quote should include all applicable taxes, fees, and shipping costs in order to be accurate. Once the customer has accepted the quote, the next step is for the business to create an invoice.
When to use an invoice?
An invoice is a formal request for payment that includes specific details about what was purchased, how much it cost, and when payment is due. An invoice is typically sent after the completion of the goods or services provided.
What is a Quotation?
As a business owner, you want to launch a project successfully and give an accurate quotation to your potential customer. A meticulously composed quote is a great way to create positive interaction with them. This also aids in conveying all important information concerning your products and services to acquire the customers’ consent.
So what exactly is a quotation?
A quotation (also known as a quote, sales quote, or price quote) is a document that provides an exact cost for a task. This is a definite price that delineates the entire expense of the job, noting the timeline, extent, and other information required to invoice at a later date.
A quotation is far more than an approximation. Once a definite cost has been declared, it cannot be altered without a fresh business arrangement. Before producing a quotation, you must travel to the location and do a preparatory examination to make sure it’s accurate.
Formal quotes should be documented, and typically include the following:
- Business name and communication details
- Thank the customer for their interest
- Particulars of the products/services requested
- Definitive pricing for materials, labour fees, taxes, and any available discounts
- Additional selections to make the customer aware of applicable offerings.
- Company branding
What are the benefits of providing a quote vs an invoice?
There are several benefits to providing a quotation:
- It allows the customer to understand the cost of a product or service and make an informed decision about whether to proceed with the purchase.
- Helps the customer budget and plan for the purchase.
- Establishes trust and credibility, as the customer can see that the seller has taken the time to carefully consider the cost of the product or service.
- Serves as a form of protection for both the customer and the seller, as it clearly outlines the terms and conditions of the sale.
- Providing a quotation can also help streamline the sales process, as it can reduce the need for negotiations and back-and-forth discussions about price.
- Finally, a quotation can serve as a formal record of the terms of the sale. This is useful for both the customer and the seller in case of any disputes or misunderstandings.
If you want to know more about the invoicing process, we’ve dedicated an entire blog post to this subject: What is an invoice in business?
What is an invoice?
An invoice is a document that business issues to a customer for goods or services that have been provided. It typically includes the date of the transaction, a description of the goods or services, the unit price, the quantity, and the total amount due.
An invoice may also include the terms of payment, such as the due date for payment, any discounts that have been applied, and any taxes or other charges that are applicable.
It serves as a request for payment and a record of the transaction for both the business and the customer.
What are the benefits of using invoices?
There are several benefits to using invoices:
- Invoices provide a clear record of the goods or services that have been provided, as well as the cost of those goods or services. This can be useful for both the seller and the buyer in case of any disputes or misunderstandings.
- They can help ensure timely payment, as they clearly outline the terms and conditions of the sale, including the due date for payment.
- Serve as a record of the transaction for tax and accounting purposes.
- Invoices can help improve cash flow, as they provide a clear and organised record of the money that is owed to the seller.
- Using invoices can also help establish credibility and professionalism, as they show that the seller is organised and takes their business seriously.
- Invoices inform the customer of payment details.
- Finally, invoices can be used as a tool for tracking expenses and monitoring the financial health of a business.
Quote to invoice process
The quote-to-invoice process refers to the series of steps involved in creating and issuing a formal invoice to a customer after a quote has been accepted.
Here is an overview of the steps involved in the quote-to-invoice process:
1.Create a quote
Information about the product or service being offered, including the price, terms, and conditions, and any relevant details or notes.
2. Send the quote to the customer
The quote is typically sent to the customer via email or it may be presented in person. Once the quote has been created, it is sent to the customer for review and consideration.
3. Wait for the customer’s response
The customer will review the quote and decide whether to accept it or not.
4. If the quote is accepted
The seller will prepare the product or service for delivery and will create an invoice once the product or service has been delivered.
5. If the quote is not accepted
The seller may revise the quote and send it back to the customer for further consideration. Otherwise, the process may be terminated if the customer decides not to proceed.
6. Issue the invoice
The invoice is typically sent to the customer via email or mail, or it may be presented in person. The invoice includes the cost of the product or service, as well as any applicable taxes or fees.
7. Wait for payment
The customer will review the invoice and make payment according to the terms and conditions agreed upon in the quote. Once payment has been received, the quote-to-invoice process is complete.
Tips for when you are finalising a Quote
When finalising a quote, you should make sure you adhere to the following:
- Ensure there are no math errors, spelling mistakes, or typos (This is important because a quote is legally binding, so a mistake could cost you!)
- Never quote for a customer if you can’t provide the service
- Don’t make assumptions, always use detailed, accurate numbers
Ensure your quote is accurate and do not undercut your services. Unmatched quotes and invoices lead to bad disputes- harming your reputation.
How to follow up after a quotation
- Automate it with an online tool (docflite.com)
- Wait 3- 5 days
- Send an email or give them a call
- Be sure to include CTA in your email
- If you haven’t heard, follow up again another 3-5 days later
- Close the lead if still no actionable response
Benefits of using software to better manage quotations and invoices
Using software to manage quotations and invoices can help a business streamline and automate its sales, billing and payment processes. This can save time and reduce the risk of errors, which can lead to more efficient operations and improved customer satisfaction.
Below we list the benefits of using software to manage your document processes.
Organise your leads
Using a software tool is an ideal way to track, organise and store your process with clients.
You can keep on track of who’s who, which project belongs to who, and also which leads should be prioritised.
This is especially important if you meet with several leads in one day.
Many software tools have built-in automation capabilities that can streamline the quotation process.
For example, you may be able to set up templates for your quotations, which can be populated with relevant information from your documentation with just a few clicks. You can also send automatic reminders if quotes have not yet had a response.
Easier to monitor the scope
Occasionally, a job can be more laborious than expected. This may result from unanticipated difficulties or acceleration of customer demands.
Quotations saved in a digital form can be useful in such a situation. They can be amended with revisions easily while keeping the dates and original content saved for future reference.
Offer your prospective client add-on services
Quotes divide all of the individual parts of a job, therefore, it is simple to look at each one individually to recall what the initial plan involved. Moreover, you can use a quote to display to your customer what added services or offerings are accessible and the cost associated with them. With the availability of additional packages, you are able to present a wide range of selections for your customers to decide from.
Offering a transparent pricing structure along with supplementary services can assist you to stand apart from your rivals. This will augment your regular offerings to customers, as well as communicate to them that you are able to provide bespoke solutions to meet their specifications.
By employing the correct software tools, you will have the capacity to offer additional services with no extra phone calls. Your quotes will be kept up to date automatically when clients accept any expansions.
Offer a more professional quote
Software makes quotes look more professional.
High-quality, attractively laid-out, and orderly quotations give the impression that you are a bona fide expert. Clients need to be confident in your fees and payments so they can have faith in your services.
A software tool can help you organise your documentation in a more logical and structured way, making it easier to find what you need when you need it. This can also save you time when preparing a quotation.
See all quote requests from one place
Having an easy-to-navigate and read user experience for finding documents makes finding quote requests so much easier.
Shorten your quotation lead time
Using a tool will give you quick access to information. You can easily access and retrieve all of your relevant documentation in one place. This is all without the need to search through physical folders or file cabinets.
Tracking quote requests
Track incoming quote requests and see website engagement metrics.
A software tool can also make it easier for you to collaborate with your team members on the quotation process. For example, you may be able to share documentation and work on the quotation together in real-time, which can speed up the process.
Overall, using a software tool to store and manage your documentation can greatly improve the efficiency and speed of your quotation process. This allows you to deliver quotations to your clients more quickly and effectively.
Using DocFlite to better organise your document processes
Using a document management tool like DocFlite can help you better organise your document processes in several ways:
DocFlite allows you to store all your documents in one centralised location, making it easy to access and manage.
This can help you avoid the clutter and confusion that can come with having documents scattered across multiple locations or devices.
DocFlite offers a range of features and tools to help you organise your documents in a logical and structured way.
- use tags and keywords to make them easier to find
- set up custom views to filter and sort your documents
- use notes to add extra details
DocFlite offers robust security features to help protect your documents and keep them safe from unauthorised access.
- you can set up user permissions to control who can view and edit your documents
- and use encryption to secure your data in transit and at rest
DocFlite also makes it easy for you to collaborate with your team members on document-related tasks.
- you can share documents with specific users or groups
Book a demo with DocFlite to find out more.
Using a document management tool like DocFlite can greatly improve the efficiency and effectiveness of your document processes. Helping you better organise and manage your documents and collaborate with your team more effectively.
You can easily automate your billing processes with DocFlite. With your accounting package, quotes, invoices, and customer and product information is automatically created and stored.
Conclusion: Quote vs invoice
In conclusion, it is important for a new business to understand the differences between a quote vs invoice.
A quote is a preliminary estimate of the cost of goods or services, while an invoice is a request for payment for goods or services that have already been provided. It is important for a business to properly issue quotes and invoices in order to effectively communicate with their customers and manage their financial transactions. By understanding the distinctions between these two documents, a business can ensure that they are properly handling their financial relationships with their customers and clients.