We all know that running a business is no walk in the park. Be it lead generation or providing customer support at every stage or finalizing customer billing – managing all these tasks simultaneously can be daunting.
So what do you do to ensure some sense of control over your business processes? Aim for clarity in the way you communicate with your customers.
You must realize that sharing a sales quote is one of the first formal communication that happens with the customer. And generating an invoice is the final output of your offerings which is the ultimate goal to achieve.
A sales quote and an invoice are like the head and tail of the process. So it is important that you keep track of what and how you communicate with prospects and customers through these documents. Whether it’s an initial quote or a final invoice, you must have a clear understanding of both of these documents. It is the easiest way for you and your team to efficiently manage the process and be on top of your game.
So, what do a sales quote and an invoice mean? How is one different from the other? Let’s do a deep dive to have a good grasp on both these documents.
What is a sales quote or quotation?
A sales quote or quotation is a business document that lists the pricing of the products or services offered by the seller. At times, it is also drafted as a response to RFQs published by potential customers.
Unlike an estimate, it includes the final details of the offerings like the cost associated with the job, tax details, applicable discounts, or the number of resources required.
Once the quote is shared with the customer or prospect, they must give a sign-off and approval for the seller to start their work.
A sales quotation is always prepared before an invoice is generated, The final amount to be charged to the customer is usually the same as mentioned in a quote, unless, there is a change or addition in the scope of work.
Here are some advantages of preparing a well-structured quote for clients from a seller as well as a buyer’s perspective –
For seller –
- A well-drafted sales quotation initiates smooth discussion with clients and ensures a faster closing time
- Provides the seller with clarity over the scope of work
- Having approved quotes for a job helps the seller forecast cash flows and profits
For buyer –
- A well-drafted quote allows the buyer to compare multiple options and choose the one that fits their requirements
- It keeps the seller informed of what products and services they are availing and the costs associated with it
In order to win a deal, one must draft a clear-cut quote that speaks for the seller, keeping in mind the client’s requirements. Preparing ideal quotes for your clients using quotation tools like Revv helps to close deals successfully. Read here to know more about how to create an ideal quote by leveraging Revv’s standardized and ready-to-use quotation templates.
What is an invoice?
An invoice is a bill or a document generated by the seller. It contains the cost that they are charging the customer for their offerings.
It is a critical document that must include important details such as a complete breakdown of the costs associated with the project, payment terms, and due dates.
61% of late payments happen because incorrect invoices are shared with customers. It is critical to leave no room for ambiguity or error while generating an invoice.
Once the invoice is shared with the client, they are expected to comply with the due date. If they don’t then the seller can charge a late payment fee or interest on the amount, depending on their late payment policy.
Ideally, the seller should share invoices with their customers once the job is complete.
What are the benefits of using an invoice?
- Sharing an invoice prompts payment -In cases where upfront payments are not required, customers might wait for an intimation in the form of an invoice, that confirms the completion of tasks.
- Invoices are useful for record-keeping – Sending out and maintaining invoicing records helps to keep a track of finished tasks, upcoming payments, unbilled amounts, etc.
- Provides clarity to both parties to the contract – Most of the invoices contain information regarding how payment has to be made and when is the payment due. When you provide straightforward and convenient payment options to your customer, you are more likely to get paid on time.
Be it an enterprise or a small business owner, drafting quotes with an aim to convert leads to customers is a challenging journey. Having clarity in your approach is crucial to reach a pinnacle of success in your sales process. This can be made easy by using quoting and selling software simplifies the task for creating sales quotations and generating customer invoices. This will help you and your customers grow and thrive together in the market.
