Regardless if you’ve just started your business or if you’ve been running a business for years, every business owner knows and understands the importance of Quoting and Invoicing.
Quotations and the role they play in your business
“A Quotation is a formal statement of promise by the potential supplier to supply the goods and services required by a buyer, at specified prices, and within a specified period. A Quotation may also contain terms of –sales and –payments, warranty clauses, and terms under which the goods or services will be delivered / supplied.”
Acceptance of quotations by the buyer constitutes an agreement binding on both parties, thus if you not only formulate your quotations correctly, but keep detail track of when an quotation was issued and the amount the quotation was issued for – you can start tracking and predicting customer interest and trends relating to the goods and services you offer.
Keeping detailed records of the quotations formulated, you can not only start tracking and predicting customer interest, you will also be able to increase your customer service, by sending the client a follow-up email a couple of days after submitting the quotation.
It is important to remember that Quotation Format vary depending on the goods and services you provide to your clients. For instance, if you sell products to your clients your quotations would mainly include the product price and quantity of products ordered. If you provide your clients with a service, your quotations would mainly include your hourly rate fee and the total number of hours allocated to complete the project and/or service.
Invoices and the role they play in your business
Several businesses put more emphasis on the Invoicing stage of the project, than the Quotation stage, which is completely understandable. By law, all businesses are required to keep / store each and every Invoice issued and all the payments received, thus getting into a good habit from the start of your business is never a bad idea, this could not only insure that you invoice the correct amounts for good or services offered, but also insures that you are in control of your businesses cash-flow.
Many businesses formulate invoices once per month, usually on the first day of the month, while this is a great system to have in place as it will ensure that you do not get overwhelmed by administrative responsibilities, it could have a negative effect on your cash-flow. By issuing invoices once per month, you allow your corporate clients to make payments once per month. If the invoice is issued at the beginning of the month, it means that you will only receive your payment towards the end-of-the-month, or the beginning of the next month. If you issue invoices as the goods and services are delivered, you will be placed on earlier payment cycles, ensuring that you do not run into a cash-flow problem.
It is extremely important to ensure that the amounts, discounts and VAT calculations made on the Invoice are correct – as this might not only affect your income threshold but also the amount owed on your VAT payments. If your Invoices are incorrectly issued, it may cause unnecessary delays in payment which might have a negative effect on your cash-flow.
In addition to the formulation of Invoices, keeping details record of set Invoices Issued and Payment Received is just as important. If you keep detailed record of all the Invoices Issued and Payment Received, you can ensure that you stay on-top of outstanding accounts and balances.
Do I need to charge VAT?
Value Added Tax (VAT) is charged at 15% in Namibia, this means if your company is VAT registered you will be required to add an additional 15% on all of the Quotations and/or Invoices issued by your company.
According to the Namibian Ministry of Finance website, VAT is compulsory if your Taxable Turnover (excl. VAT) exceeds N$ 500,000.00 per annum. VAT is voluntary if the business Taxable Turnover (excl. VAT) is less than N$ 500,000.00 per annum.
While it is relatively easy to create a Quotation and Invoicing Templates in Excel, the iWits team has taken the time to create 3 x SME Templates for you to use on a daily basis: