The administrative side of running a business should never be underestimated or overlooked. There is always more paperwork than business owners ever anticipate, and it will always take longer than first thought. Even with the best processes and procedures in place, staying on top of recording all the incomings and outgoings of your businesses as well as correspondence with any client or customer can take far more time than producing the goods or services you’re selling.
In addition, knowing what paperwork and records need to be made can be confusing. However, business owners need to learn quickly what they need to have in place for their company to run as smoothly and efficiently as possible. Good administrative practices will always underpin the success of a company and help it in the future if they get the basics right from the beginning.
One such area is fully understanding what a quote is and what an invoice is. To some, they look so similar that it begs the question – is a quote the same as an invoice? In short, despite looking very similar on the surface, they are in fact very different and serve two different purposes.
In this article, we’ll look at what those differences are as well as defining both pieces of paperwork. In doing so, you should be able to fine-tune your quoting and invoicing processes so that they can be as effective from the start.
What is a quote?
It’s important not to overcomplicate things too much when it comes to paperwork and your business. As a result, all a quote needs to be is a formal estimate of what you as a business anticipate your services or goods costing a potential customer. Some companies will choose to provide these quotes verbally, while others will choose to document it. It’s a basic outline of every item you believe you will need to charge a customer for, with the belief that you’re giving as close an approximation as possible of what the final amount will be, should the customer choose to go ahead and use your company.
What is an invoice?
An invoice is a formal request for payment from a company to a customer. It will detail every single item that the company has provided the customer, be it a product or service. Each item needs to be priced up with the exact amount the company charges for such a service or product. Finally, the invoice should stipulate how to pay, where to pay, and how much to pay as well.
Both quotes and invoices are very important to any business. Quotes can be seen as a way that a company is pitching for work whereas invoices are necessary to ensure that a company gets paid for any work completed. While they can vary in amounts, it’s good to get them as closely aligned as possible. The reason being is that as a company you are more likely to know what any future income is likely to be more accurately, and also customers are more likely to trust you if the quote reflects a similar amount on the invoice.