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As a new business owner, you might wonder when is the right time to issue a quotation and when is the right time to use an invoice. Both the quotation and invoice are non-legally binding agreement, however, it is important for us to know the difference between these two documents. Also, what are the required information to include in each of them.
The Differences Between a Quotation and an Invoice
Let us start by defining what is a quotation, and what is an invoice.
What is a Quotation?
A quote is created and issued before any work is done or products sold. It is a formal estimate that indicates the dollar amount for the products or services needed and it ensures that you only owe that amount (not a completely random number) for the products or services. It can be verbal or written.
A quote is often valid for 30 days from the date we issue it. But, it can be adjusted or revised upon a customer’s request. Issuing a quote does not change the inventory. This is because the work or product is not fulfilled yet. You can Request for Quote (RFQ) from different agencies and respond to your desired RFQ with a Purchase Order.
What is an invoice?
On the other hand, an invoice is a document to request for payment. It is a document sellers send to their buyers relating to a sales transaction. There are many types of invoices. An invoice can be issued for work that is in progress (e.g. milestone payments) or has been completed. It can also be issued for products that have been delivered or before the goods leave the warehouse.
An invoice indicates the total amount owing for each line item of products sold or services provided. The invoice is based on the quote issued previously, therefore, an invoice is sent after a quote. It is a commercial document to keep track of who has paid and who has not, and for tax report verification purposes. It can be handwritten on a piece of paper, typed out on Excel or issued from an official IRAS-approved invoicing software.
Elements to include in your invoice or quotation
- Document number
- Document date
- Quotation/Payment due date
- Contact information
- Itemized list of Products or Services
- Dollar amount for each item line
- Information about Taxes and Fees
- Payment terms
- Discount (if any)
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The advantage of using an official IRAS-approved e-invoicing software is that you can be sure to be compliant with the regulatory. With a document gallery built with over 80+ templates ready for you to choose from, you can pick your favourite document design and send them out immediately at the convenience of your browser or mobile apps.
That’s not the end! After issuing the invoices, you would also want to keep track of payments and remind customers to pay their invoices owed to ensure that you get the money you worked for. With Enterpryze’s cleverly connected features, we help you get the job done in the simplest and quickest way possible. Stay on top of your business administration, and be a better business today!
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