QuickBooks Quotation (Estimate)

Software: Intuit #QuickBooks #accounting software

A Quotation (Estimate) is a document sent by the seller to a potential buyer, which states the cost of goods and services the seller has committed. A Quote is a non-posting transaction, which will not be included in the receivable nor deduct the inventory on hand from the item list.

QuickBooks has a built-in Quotation feature (Estimate), which help small businesses to ease up the quotation process. It allows the user to pick up the customer name (or job) and items from the database when creating a quote; convert a Quote into a Sales Order upon confirmation. Besides, you can also convert a Quotation or Sales Order into a Sales Invoice when you are ready to bill the customer.

By default, the markup in a Quote is by percentage. For example, if the cost of an item is $21,557.50 and you intend to sell it at $29,941.00 before tax, the markup of this item is 38.88902% (QuickBooks round it to 4 decimal places). However, due to the rounding, an issue will occur when more quantities of the above item have quoted.

QuickBooks Quotation

Assuming you quote a customer 11 units of the above item. The “Total” price is supposed to be $29,941.00 x 11 = $329,351.00 but Due to the rounding in percentage markup you get $329,351.01. To solve this, you remove the “%” symbol from the Markup column and enter the final amount of $329,351.00 into the “Total” price field. QuickBooks will calculate backwards and record $92,218.50 in the markup column. This method force QuickBooks to markup by dollar value instead of by a percentage.

Although there is a small issue in rounding, the QuickBooks Quotation (Estimate) feature is still useful for SOHO and small businesses.