WHAT IS QUOTATION IN ACCOUNTING/BUSINESS?

A quotation is a formal statement of intent issued by a seller to supply goods or services required by a buyer at a specific price, within a specific timeframe and under specific conditions.

In other words, a quotation is a statement outlining the price at which a seller will sell products to a buyer.

A quotation usually contains the supplier's proposed price as well as the terms and conditions of sales.

If the purchaser accepts the quotation, the supplier will then issue a sales invoice to the buyer, which will bind both parties

A quotation is sometimes called a sales quote or simply, a quote.

Quotation tends to be used when a business doesn't have a standard price listing for its goods.

Indeed, here will be no need for a quotation if the company has a standard or fixed price listing for its goods.

A quotation generally contains the following information:

1. A line-by-line breakdown of the price of the goods.

2. An explanation of the Value Added Tax (VAT) that is charged on the merchandise.

3. The period during which the service will be rendered or the goods will be delivered.

4. The company name that issued the quotation.

5. The address of the company issuing the quotation.

6. Terms and conditions guiding the quotation

7. If relevant, the time frame during which the quote is valid. Most quotations have a 30-day expiration date.

After the validation period, it is expected that the buyer request a new quotation.

8. Other relevant products the supplier also sells.

9. Whether prices are liable to modification without notice.

10. A quotation number

11. Column for all parties to sign.

Generally speaking, a buyer who needs more information about products or services before making purchases will typically request a quotation.

Therefore, a quotation allows the consumer to know about the price and other relevant information about a good before making purchases.

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