People often interchange the words quotes and quotations in business and finance, or even in everyday conversations.
Although it’s widely accepted in most circles, there is a slight difference between the two. As parts of speech, “quote” is a verb, and “quotation” is a noun. Yet people today use these terms loosely, as much as they interchange the words “invitation” and “invite.”
So, if you want to be grammatically correct in your business communications, you will not say, “I will send you a quote based on your requirements”. Instead, say “I will send you a quotation based on your requirements”.
Much as the same way, you will not say, “I will quotation according to your specifications”, but rather, “I will quote according to your specifications.”
Quote and Quotation in Finance
In the stock market, quotation specifically refers to the most recent value of stocks, bonds, and other traded assets. This helps determine the final sale price of shares between sellers and buyers.
Typically, the seller quotes his or her ideal price based on the current valuation of the stocks. Buyers, on the other hand, give a bid, or the ceiling amount that he or she is willing to pay. Once all terms are agreed upon by both parties through the mediation of a broker or brokers, a sale transaction will push through. This usually happens after both parties consider and worked around the original quotation.
What is a Quotation Form in Business Transactions?
Now that we have settled the correct usage of “quote” and “quotation”, it is safe to label the print or online form you send to your clients to state your bid for a project as “Quotation Form” and not a “Quote Form”.
A Quotation Form is a formal document you submit to a prospective customer that shows how much you are selling or charging for a certain product, service, or both. It is often sent upon a client’s request or as an entry to a bidding process.
In some instances, it can be considered binding between you and the client if they accept it and properly acknowledge it by affixing their signature and company stamp on the document. But most of the time, the client issues a Purchase Order or Service Order, or a contract is drawn between you and them.
What Must be Included in a Quotation Form?
There are pieces of information that are considered staple or essential in all Quotation Forms. Then, there are specific data that are added or even customized for certain businesses according to the products and/or services they offer.
Let’s look at them closely.
As I’ve mentioned, quotation forms are often deemed binding upon the acceptance of the intended recipient. First, once you submitted it, it is expected that you will honor everything you put into writing such as the quantity and specification of the product, the price you quoted, the delivery date, and other details you promised.
Second, if the same document is duly acknowledged by the client, you can also hold them responsible to keep their end of the deal, which is paying you according to the agreed terms.
So, your quotation form must contain the following:
- Your name or your company’s name and logo
- Name of your company’s authorized representative
- Your client’s name (individual or company)
- Name of your client’s authorized signatory
- Date of submission of the quotation
- Date of acceptance
- Validity of the quotation – you might think this is not important, but what if they only acknowledged your quotation after several months and the price of the raw materials you need has jacked up?
- Reference number – for easy tracking
- Particulars (quantity, specifications, unit price, etc.) – more on these later
- The total amount of the project including taxes
- Promised delivery or completion date
- Terms and modes of payment (NET 30, NET 60, etc. / cash, cheque, wire transfer, etc.)
- A place for you and your client to affix your respective signatures
- Penalty clause (optional) – it means you can charge a certain percentage of the contract price if the client did not comply with the agreed payment terms.
There are pieces of information that depend on the nature of your business. These are usually reflected in the “particulars” or the main body of your quotation. This is commonly in table format.
If You Supply Finished Products
You should have the following columns in your quotation form:
- Quantity – it indicates how many units per product you are going to supply.
- Description or Specifications – here, you need to describe exactly the product(s) such as its kind, size, color, material, printing or other customizations, etc.
- Unit Price and Subtotal
- Total Contract Price
- Shipping Details – if you’re product is coming from or to be delivered overseas, you have to specify if your price includes one of the following:
- FOB (Freight on Board) – charges only cover up to the loading of the goods to the container – the client will pay for the shipping themselves
- CNF (Cost & Freight) – your cost includes the shipping
- Ex-factory – you are only quoting for the cost of the goods – the client will pay for all the shipping arrangements
If You Provide Services
When you are only providing services such as software development, cleaning job, etc., you should have a column in your quotation form for:
- Project scope – enumerating all your deliverables
- Number of personnel needed
- Chargeable labor hours x the number of deployed employees
- Amount of labor charge per hour or day
- Total contract price
- You may also include a clause for incidental expenses
If You Provide Both Products and Services
This applies to building contractors, catering services, and the like. If your business falls into this category, then you probably need to include most of the columns that are mentioned in the two categories above. It depends on your discretion or requirement, which ones to include and leave out.
In some cases, you also have to provide supplementary documents, such as a Bill of Materials if you are into construction.
If spoken, it doesn’t seem to matter much whether you use “quote” or “quotation” in conversations. However, it could be a different story in written business communications.
It is a very simple concept, really. One is a verb and the other is a noun. Once you know that, the rest should be easy in determining their proper usage.
In business applications, however, you should know the importance of being precise when quoting a price for your client. You should also be aware of the implications of putting things to writing and affixing your signature – it means that once a project is awarded to you, you must deliver what you promise for the price you quoted.