Getting to Know the Sales Process

Issuing an invoice is just one part of completing a sale. The sales process often involves sending several different documents to your customer, which all perform a distinct function.

This article explores the different documents that you might issue to your customers, including estimates, quotations, proforma invoices, finalized invoices, delivery notes, and payment receipts.

Customer inquiries

It’s common for customers to reach out before committing to a sale. Usually, these inquiries are surrounding the prices you charge for certain products or services.

When a potential customer first contacts your business, you can issue either an estimate or a quotation. Both options will provide the prospective buyer with an overview of the costs involved that’ll help them decide whether they wish to continue with your company. 

Issue an estimate if the price might change

An estimate is essentially an educated guess of the costs that would be involved in the sale. The customer may have provided a few details, but may not have provided the information you require to give an exact price (e.g. accurate measurements). 

Estimates are common for businesses that provide services, because the prices may change until the business has an exact understanding of the services and extra materials that are required to complete the job. 

If you issue an estimate to a potential customer, you should make it clear that the price may change. 

Provide a quotation

Quotations, also known as quotes, are issued to potential customers to let them know how much the goods or services will cost before they have committed to a purchase. They differ from estimates because they require clear parameters, such as time and materials, and the prices don’t usually change unless the customer requests more work. 

Although quotations are not legally binding documents, you should always ensure that your quotes are correct and offer accurate prices that you can commit to. 

It’s also important to issue a quotation as soon as possible. The customer is likely shopping around and getting different prices from different businesses. The quicker you send the quotation, the more likely they are to purchase from your company. 

Quotations should include most of the mandatory invoice fields. The only differences will be that the quote will include the title “Quotation” or “Quote”, a quote number instead of an invoice number, and won’t require a due date. 

Finalize the sale with an invoice

Once the customer has committed to the purchase of your products or services, you’ll then need to issue them an invoice. This can either be a proforma invoice or a finalized invoice which we’ll explain below. 

Issue a proforma invoice

A proforma invoice is essentially a draft invoice that’s issued after a customer has committed to a purchase, but the final details of the sale have not been confirmed. A proforma invoice differs from a quote because, with a proforma invoice, the customer has already confirmed that they’ll purchase from your business. A quote, on the other hand, is issued in an earlier stage of the sale. 

As an example, let’s say you own a custom t-shirt business. A customer contacts you that they need 20 t-shirts featuring their logo for their new employees. They’ve already confirmed that they’ll purchase from your business because you offer the best prices. The customer doesn’t have the exact t-shirt sizes yet but gives you an estimate of 5 large, 10 medium, and 5 small. You issue a proforma invoice to the customer until they get back to you with the final sizes. 

A proforma invoice will include all of the mandatory invoice information, except for an invoice number, and will clearly state “Proforma” to distinguish it from a finalized invoice. 

A proforma invoice isn’t a legally binding document. So, once the customer has confirmed the final details of the sale and payment is due, then you’ll need to issue a finalized invoice. 

Issue a finalized invoice when payment is due

Finalized or full invoices are legally binding documents that are issued from a seller to a buyer once payment is due. There’s mandatory invoice information that needs to be included for your invoices to be valid under US law. This includes the title “Invoice”, information about your business and the customer, and a breakdown of the sale and total amount due. 

Invoices are the most common document issued in the sales process. Most types of invoicing software will allow you to convert a quote or proforma invoice into a finalized invoice, or create one from scratch. 

When you issue an invoice to your customer, the sale is finalized and the invoice cannot be changed. If there are any mistakes on the invoice, or anything needs to be changed, this needs to be done correctly by issuing a credit memo

Confirm payment with a payment receipt

Your finalized invoice should include a due date and payment terms (how the customer should pay the invoice). Once payment has been received, you should issue a payment receipt letting your customer know that the invoice has been paid. 

Any time you receive a payment, even if it’s a partial payment for a large order, a payment receipt should be issued to let the customer know how much has been received, and if there’s any remaining balance due. This will give the customer peace of mind, but also reminds them if there are any remaining payments to be made. 

Payment receipts should include your business details, the invoice number, the amount paid, and any remaining balance due. 

Send a delivery note

If your business supplies products to its customers, then you should issue a delivery note with your shipments. Delivery notes list all of the products that are included in each delivery. This is useful for the business because not only does it help them easily prepare the shipment, but it’s also used by the customer as a checklist to make sure that they have received all of the goods. 

A delivery note should include the details of the business and the customer, and a list of all of the products included in the shipment. It doesn’t need to include the prices, but you can include them upon customer request. You may also want to have the customer sign the document after the shipment has been provided to confirm that all of the products were received. 

Simplify the sales process with invoicing software

Invoicing software, like SumUp Invoices, can help you in every step of the sales process, from quotes to delivery notes. Unlike programs such as Word and Excel, invoicing software is specifically designed with the sales process in mind to help you easily create legally compliant documents. 

SumUp Invoices is invoicing software that helps automate the process by auto-filling the required information. You can import your customer and product information for quick selection on the pre-made templates. 

You can also quickly convert quotes to finalized invoices and keep in contact with your customer at every step of the process. In addition, each invoice you create will include a payment link, so your customers can pay instantly online and you receive payment faster. 

SumUp Invoices includes simple templates, so you have all of the mandatory information. In addition, these templates are updated when there are any changes to your local regulations, for instance, tax rates.