It is common business practice to offer custom pricing via sales quotes based on specific requirements. For this purpose, companies typically issue estimates, quotes, or pro forma invoices. Here’s how to do it in QuickBooks and then convert these documents into regular invoices.
When quotes and estimates are useful and how to use them
For many companies, it is common first to collect all necessary information and then craft a tailored proposal. Depending on circumstances and the needs of the business, companies can email sales quotes using dedicated documents generated directly in an accounting system.
In QuickBooks, quotes, bids and proposals are all under one umbrella called, by default, “estimates”. You can email these documents directly from your QuickBooks account and then convert them into invoices after completing the transaction.
Note: You can modify the estimate’s name to “quote” or “pro forma invoice” in the Settings. Scroll down to see how to do it.
To create an estimate in QuickBooks Online, click Sales and then the green button which allows you to choose Estimate from the drop-down.
In QuickBooks, estimates have a similar list of default elements to invoices with some differences.
- There is no field for a deposit
- Due dates and payment terms, such as Net 30, are not available
- Estimates may include an expiration date showing how long the offer is valid
Similarly to invoices, estimates include two message boxes by default, where you can list any terms, requirements, or notes related to the future transaction.
Of course, you are free to modify the style and elements in the Settings tab.
What pro forma invoices are and how to use them with QuickBooks
A pro forma invoice is a commercial document which breaks down products or services offered and provides the client with payment details. It includes an estimation or a quote for the client listing the amount, products or services, quantities, the seller’s details, and so on.
A pro forma invoice typically shows what the future invoice will look like. Thus, you have to make sure that a pro forma invoice fully and accurately breaks down all details related to the transaction. In most cases the contents of a pro forma invoice are identical to a standard invoice, bar the document’s name, albeit the final price may vary due to discounts or other changes in the rate.
A pro forma invoice is not yet a request for payment but more of an invitation to make a purchase. In comparison to an estimate, a pro forma is typically more of a formal document similar to an invoice.
How to issue a pro forma invoice in QuickBooks
QuickBooks doesn’t list pro forma invoices among the default sales documents.
If you want to issue a pro forma invoice in QuickBooks, simply follow these steps to change the name of estimates:
- Click the gear icon in the top right corner
- Click Custom Form Styles >> New Style
- Select the Header tab and then change the name in the field labelled Estimates to Pro Forma Invoice or any other document name according to your needs
- Save the new style
You can also access the customisation menu from an individual estimate’s edit window. To do it, edit a previously created estimate or create a new one and then select “Customise” from the bottom menu.
To open a form that creates a new estimate, you may also use one of the QuickBooks Online keyboard shortcuts.
How to convert quotes into invoices in QuickBooks
You can access all estimates (or pro forma invoices) in the Sales tab where the main action is “Create Invoice”. You can also click the arrow next to it to access options, including Print, Send, Update Status or Copy.
The “Create Invoice” button converts estimates into invoices. In this case, all invoice fields are pre-populated with information copied from the estimate.
Can you use quotes or pro forma invoices as expense-related documents?
Estimates, quotes, or pro forma invoices are not legally enforceable documents that you can use as evidence for company expenses. Both quotes and pro forma invoices are put together before the payment and the delivery of goods or services so they only mean an intention for the transaction to happen.
To prove that expenses took place you either need invoices or receipts. An invoice is typically a request for payment issued before the money is handed or transferred. A receipt, on the other hand, is an acknowledgement for payment. Read more about the difference between an invoice and a receipt.