When to use an invoice vs. a quote

It’s clear that the two documents serve different purposes. And yet they’re strikingly similar. It can often be a bit cloudy when it comes to determining when both are necessary, or whether an invoice is the only one needed.

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An invoice is needed once the order is confirmed or at the end of the service. The invoice should outline the goods or services provided and the total price as well as VAT (if applicable), along with any discounts that have been applied.  

A quotation, on the other hand, is issued before the goods or services are delivered and provides an itemised list and expected costs.

Let’s take a look at an example to provide a clearer image.

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.

When a quotation is necessary

In the situation outlined above, the car would be dropped off at the repair shop, where it would be examined and an outline of the repairs would be prepared for the quotation. The full cost would be estimated and included.

Keep in mind that a quotation should be as thorough and accurate as possible. This means that the totals should include the costs of:

  • Labour

  • Parts

  • Materials used during the repair

  • Any applicable tax

It should also mention any relevant terms of service that could impact the repairs or payment terms.

After a quotation is issued, a customer might negotiate based on, potentially, other quotes that they have received about the cost of repairs. Changes can then be made to the quotation to make it more appealing to the customer. Always, the price should be agreed before the service is completed.

The best quotation is one that is honest and transparent. It should provide the clearest indication of the final costs that the customer will encounter in the invoice.

Quotations in online invoicing software

Today, most online invoice software providers like SumUp Invoices offer the option to create quotations. Accepted quotations can then be converted to invoices in just a few clicks, saving you time creating the invoice from scratch.

With SumUp Invoices, you can also add your business logo to your quotations, giving them a more personal and professional touch.

When your quotation is accepted

Once you have created a quotation, you can mark it as accepted, and instantly convert it to an invoice when necessary.

Or, if you find it’s not necessary to issue a quote, you can use our simple invoice template to quickly create a custom invoice and send it to your customer once the order or service has been fulfilled.

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