While there are many differences between the two, quotations and invoices are recognized as close enough. Both are used for making sure a business or a company is paid. We, in the following post, will explore the difference between the two and the timing of each.
When there are business transactions and dealings being done between parties or between a customer and the company, quotations and invoices are used. The above statement makes them sound the same, right?! Both are documents that serve the purpose of keeping proof of when businesses are receiving money or experiencing any flow of money. The costs accumulated on dealings of the sort are detailed in these legal documents.
What’s the difference, then? How would one be able to identify and distinguish between the two? Let us find answers to these by talking about each separately:
A quotation is also referred to as a quote or price quote at various places. It is a document that is very close to an ‘estimate’ but different. It explains and provides detailed and accurate information on a project’s estimated cost even before it has taken place. The trusted representatives of a business are the ones responsible for making quotations. They are expected to meet the other party, keep regular contact, visit the proposed site, or listen to the needs of the customers.
The quotation is prepared in advance and helps businesses get a preliminary idea of the cost, the time schedule, and the level of the deal that is being undertaken. One thing to be noticed is that a quotation is a “critical” document and cannot be created just out of mere haphazard estimates. Rather, these require the responsible business representatives to very carefully and accurately provide the details needed.
A quotation is not a document you would want to prepare while you’re in a rush. It takes time and cares to come up with one. We are putting down details of what should a carefully curated quote must look like:
A quotation must be provided very quickly after the customer asks for it and must have the signatures of all the parties. For a better customer experience, a disclaimer can be given too. a transparent, computer-generated, and exact quote will also bring more benefits.
An invoice is a legally-stamped financial document that keeps a record of the business transaction. The terms and conditions for the deal and available methods of payment are provided too. In addition, the items or services offered are written to request the customer to pay for these. The date of payment decided is another important part of the invoice.
An invoice is sent after the job has been done and expects the customer to pay in time. However, this is not the case every time. The customers fail to make their due payment in the time that was originally decided. In order to deal with situations like these, the following are the things that an invoice must contain to keep its formal vitality:
We have talked about the template and outlook of both quotation and invoice and how these are similar and different from each other. Even though both are very much alike these cannot be used interchangeably!
To sum up the debate in brief words it can be said that a quotation document is created BEFORE the business dealing, or work had begun. It contains details on the estimated cost of the project or job that is expected to take place.
An invoice, on the other hand, is specific to when the payment process between parties or between a client and a company has been COMPLETED. The cumulative costs accrued on the dealing and details of when it took place. In case of pending payment, the date and timing of it are provided to allow the parties to remember and keep track. Both of these are vital and are considered legally valued in order to make sure all financial processes related to businesses are documented carefully. One cannot depend on oral dealings anymore!
Watch the video tutorial below on how to create a Quotation or Invoice in MS Word