In the sales process, there are several different documents you can issue to your customers. Each document has its own distinct function dependent on which stage of the sale you are in. In this article, I will discuss the sales process and when to issue a quote, proforma invoice, invoice, delivery note, and receipt.
The quotation stage
A quotation is issued at the earliest stage of the sales process. It is provided to a customer who has enquired about prices or has shown some interest in purchasing but has not yet committed to the sale.
Quotations include most of the elements that are on an invoice, such as a breakdown of the price, the business and customer details, and any discounts or payment terms. A quotation, however, is not a legal document and payments cannot be made on them. It is used only to provide pricing information to a potential buyer.
The proforma invoice stage
A proforma invoice is a document issued to a customer once they have confirmed that a product or service will be purchased, but the final details have not yet been confirmed.
It is different from a quote because the customer has already confirmed that a sale will occur, whereas a quote is issued only when a potential buyer asks for pricing information.
A proforma invoice will look like a standard invoice, but it will not have an invoice number, and will include a ‘Proforma’ label rather than an ‘Invoice’ label.
A proforma invoice is not a legal document, and therefore payments cannot be accepted with this document. If the sale has been confirmed, and the customer is ready to pay the balance due, then a full invoice must be issued.
The invoice stage
An invoice is issued once the customer has confirmed the sale and payment is due.
You can convert a quote or proforma invoice into an invoice once the final details of the sale are complete and the customer is ready to pay for the product or service.
This is the most common document issued in the sales process, and how you accept payment for your product or services.
The delivery note stage
A delivery note is a document that outlines the delivery of products and accompanies the shipment.
This document is issued after the invoice and describes which products are included in a specific shipment.
It is often used as a checklist for the customer to ensure that all products have been received. All products that are listed on the delivery note must be included in that particular shipment.
A delivery note will include the details of the business and customer, the date of issue and delivery, and the description and quantity of the products included. It may also include a breakdown of the price, and a section for the receiver’s signature to confirm the products were received.
The payment receipt stage
A payment receipt is issued to a customer once you have received any form of payment from them. This can include either a partial or full payment of an invoice.
A payment receipt will include the business details, the original invoice number, the date the payment was received, the amount paid, and any remaining balance due.
Using a credit note to correct an invoice
An additional document used in certain circumstances is a credit note. It is used in the case of a refund to the customer, or to correct information on an invoice.
For instance, if a customer returns damaged goods, for either a full or partial refund of the original invoice, a credit note can be issued. The credit note will essentially cancel part or all of the purchase and reflect a return of funds, or simply an edit to the invoice if no funds have been received.
You are able to issue multiple credit notes on one invoice, as long as the credit amount does not exceed the total invoice amount.
Using invoicing software to simplify the sales process
Invoicing software can help make the sales process more efficient and save you tons of time and money.
With Debitoor, you can quickly create and send all of the documents explained above in just a few clicks. The system will also automatically save and update your important accounting reports such as the balance sheet and profit and loss statement.
On top of that, you can customise your documents to add logos, images, and colours to make your invoices stand out from your competitors.
Here is an example of a customised invoice created with Debitoor invoicing software:
If you want to get started creating unique and professional sales documents, feel free to give it a shot with our 7-day free trial.