Quotations and sales orders often carry the same items and prices, so they are easy to confuse. They do different jobs: one asks the customer to buy, the other records that they have.
The quotation: an offer
A quotation tells the customer what you can supply, at what price, with what tax and on what terms. The customer may accept it, ask for changes or ignore it, so it should not reserve stock or appear in your sales figures.
The sales order: an agreement
A sales order records what the customer has confirmed they will buy. It is the document the godown works from, the one deliveries are counted against, and the one that tells you what you still owe the customer.
Side by side
| Quotation | Sales order | |
|---|---|---|
| Purpose | Offer prices and terms | Record what the customer agreed to buy |
| When it is made | Before the customer decides | After the customer confirms |
| Stock | Not affected | Drives what is delivered, and what is pending |
| What follows | A revised quotation, or an order | Delivery challans and invoices |
| In your reports | Pipeline or enquiry reports | Pending orders and deliveries |
Moving from quotation to order
- Check whether prices, quantities or terms changed in negotiation, and use the agreed version.
- Note the quotation number and the customer’s purchase order number on the sales order.
- Close the quotation once it becomes an order, so open quotations show only live offers.
Common mistakes
- Treating a sent quotation as a sale, which overstates expected revenue.
- Delivering against a quotation instead of an order, so nothing tracks what is pending.
- Re-typing the order from scratch and introducing price or quantity errors.
Common questions
What is the difference between a quotation and a sales order?
A quotation is an offer to a customer, with prices and terms they may or may not accept. A sales order records what the customer has agreed to buy, and drives delivery, pending quantities and billing.
Does a quotation affect stock?
Generally no. A quotation is only an offer. Stock is committed when the customer confirms an order and goes out with the delivery.