Debitoor Dictionary

Accounting terms explained in a simple way

Over 150 Articles for Founders and Entrepreneurs

  1. Invoice
  2. Recurring invoice
  3. Proforma invoice
  4. Revenues
  5. Sales

Quotation - What is a quotation?

A quotation is a document that a seller provides to a buyer to offer goods or services at a stated price, under specified conditions.

Create a professional-looking, customised quote in less than a minute with Debitoor invoicing software. Try it free for 7 days.

Also known as quotes, sales quotes, or sales quotations, quotations are used to let a potential buyer know how much their goods or services will cost before they commit to the purchase.

Quotations are usually not legally binding unless they are part of an official contract; however, it is generally accepted that a customer has committed to a sale, and a specific price, if they accept a quotation.

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When to use a quotation in business

A quotation can be an important part of the sales and invoicing process for many small businesses, sole traders, and freelancers. Quotations are normally sent at the request of a customer who wants to know more about certain goods or services before they make a purchase.

Quotations are usually used when the work that is being quoted has clear parameters (time, labour, raw materials, etc.) and costs are relatively stable.

Some businesses cannot give quotations because it simply isn’t possible to give a fixed price for a good or service. Instead, these businesses would issue an estimate – a non-binding approximation of what a job is likely to cost.

What should I include in a quotation?

Unlike invoices, which have many legal restrictions and regulations, there are very few set rules on what should be included in a quotation; however, including the following information helps potential customers get a better idea of what they are committing to:

  • The price: your quotation should include the price you have decided to charge for the service or goods to be provided. This price can be accompanied by a breakdown of the components leading to the settled price, including labour costs, raw material costs, and (if applicable) VAT.
  • An expiration date: each quotation you send should indicate a specific period for which the quotation is valid, letting your customer know how long they have to accept or decline the quote.
  • Contact details: as with all invoicing documents, a quotation should include the full contact details of your business and your terms of payment.

You might also choose to include a rough time schedule - for example, how long the project will take to be completed or how long it will be until goods are delivered.

Find out the meaning of a quotation in business and learn how a quotation can fit into your invoicing and accounting

Quotation vs. proforma invoice

A proforma invoice is a non-official invoice that is sent to a customer before the final details of a sale are confirmed. They are often used at the same point in the sales process as a quotation; however, quotes and proforma invoices serve slightly different purposes.

A quotation would normally be sent if a customer makes an enquiry, or if they want to find out more about a product or service . A proforma invoice is sent if a customer has committed to a purchase, but cannot be sent a true invoice because the final details of the sale are not certain.

Quotations in Debitoor

Send professional, personalised quotations with Debitoor invoicing software. With our automatic templates, creating and sending quotes is fast and simple. Fill in your customer’s details, add the products or services, and add notes or terms as necessary.

With Debitoor, you can customise the quote with different layouts, fonts, and colours. You can even add attachments to give your customer more information about the products or services you’re providing.

When you send a quotation, you’ll be notified when it has been viewed or accepted by the customer. You can then turn an accepted quote into an invoice with just a few clicks. Find out more about quotes in invoicing or try Debitoor free for 7 days.

CREATE A QUOTE WITH DEBITOOR

Create a business quotation with Debitoor invoicing & accounting software. Find out more about the meaning of quotations in business and how to send a quotation with just a few clicks