A quotation is the price and terms a seller offers a prospective buyer for specified goods or services, before any order is placed. It is an offer, not yet a binding transaction.
What it means
A buyer accepting a quotation typically converts it into a purchase order, at which point the seller's original terms become binding. Quotations are usually valid only for a stated period, after which prices may change.
Where it fits in
Quotations sit at the very start of the trade cycle, before the purchase order, delivery and invoice, and are where pricing and terms and conditions are first agreed between buyer and seller.
Key rules
- An offer of price and terms, not yet a binding order.
- Usually valid only for a stated quote validity period.
- Accepted by the buyer issuing a purchase order.
- Distinct from a pro forma invoice, which is issued closer to the point of sale.
