What is a quotation?
Published
A quotation is a document you give a customer setting out what you will supply, at what prices and terms, before commitment. It creates no revenue, no tax, no receivable - its effect is commercial and negotiational, and it acquires accounting effect only when accepted and converted into an invoice.
The elements of a professional quotation
- Itemised lines with quantities and unit prices - not a lump sum that invites dispute.
- Tax shown explicitly: net, VAT, total - so the invoice holds no surprise.
- An explicit validity period (14 or 30 days) protecting you from cost swings.
- Payment terms, delivery terms, scope, and exclusions.
- A reference number cited later on the purchase order and invoice, completing the audit thread.
The clean path
Quotation ← negotiate/revise as numbered versions ← written acceptance ← customer PO or confirmation ← supply ← tax invoice
Every change is a new version, never an overwrite - the negotiation trail protects both sides.
Frequently asked questions
The customer approved the quote - is that a final commitment?
Written acceptance establishes the understanding; better still, convert it immediately to a PO or contract, then invoice on supply. A quotation alone is the weakest document in a dispute.
Do I show VAT on the quote or just write "excluding VAT"?
Show it as a number. "Excluding VAT" manufactures a 15% surprise at invoice time, and billing surprises kill trust.
An expired quote and the customer returns?
Issue a fresh version with updated dates and prices - the old one is not revived.