Quotations and invoicing is an essential part of your financial business administration, and the more formal your records from the beginning, the better for you. It is always good to have any type of contract, agreement or transaction in writing.

A business exchange is an agreement between two parties. The customer agrees to pay you in exchange for your products or services. Therefore, this serves as a contract between two parties. For this reason, it is good to have a record to prove and record your side of the contract.

Providing formal quotations and invoices also makes your business professional. It could be the difference between you and your competitor, and shows that you are serious about your product or service.

What is the difference between a quotation and an invoice?

A quotation is generally given before a service is rendered or products delivered, in order for the customer to have an idea of the cost before committing to the purchase of the product or service. The quotion should include all costs associated with the job, and the terms and conditions which come with it. It is up to you, based on the nature of your business, whether you require the client to formally sign off on a quotation or not. A quotation need not always be in formal writing. Sometimes an agreement over email indicating acceptance of the quotation is enough, or even via text, or verbally, but you may want or need a formal signature on a formal quotation, especially with bigger amounts. Further on we will talk about what a formal template for a quotation might look like.

An invoice is then sent or provided once it has been agreed that the exchange will take place – i.e. the client has accepted your quotation and has agreed to pay you for your product or service. Your till slip at a retail shop is considered an invoice. If a quotation is ‘’signed off’’ it should become an invoice. In most cases, sign-off quotations are used in bigger service based businesses. For example, the construction industry. The invoice then displays to the client what they are liable to pay and owe you after accepting your quotation. Depending on the conditions you set in your quotation, you can indicate whether a deposit should be paid and how much and at what point.

What details need to be on an invoice or quotation?

Both quotations and invoices should have:

  • Your business name and logo, and if applicable, VAT registration number
  • Your address if applicable
  • Your client’s name and address
  • The date
  • Your banking details
  • The reference which the client must use when making the payment, if needs be
  • Your terms and conditions
  • The cost and list of the product/s or services – on a quote it will be before the transaction, and on the invoice it will be the actual transaction
  • The due date for payment
  • The tax deduction/addition

There are a number of online invoicing services which make invoicing pretty simple for you. A few to check out are:

  • https://invoice-generator.com
  • https://www.invoicesimple.com/invoice-generator
  • https://www.waveapps.com/invoicing/tools/invoice-generator
  • https://invoicehome.com/

This article does not address tax, but you should keep and file all your invoices not only for tax purposes, but for your own records as well as should a customer return to query something, ask for a refund for a particular reason, etc. If your terms and conditions are set on your invoice, this protects you from such queries.