To explain the business use that I am putting it to.
For prospective new clients, the plan is to create a PDF Proposal - which will constitute the following:
Quote, Contract, Schedule of Services, SLA and Terms and Conditions.
If the client accepts the quote and signs the contract, I could send them either a Sales Order from Manager or a Pro-Informa Invoice. The reason that I want to send them a separate thing is so that they can put the order onto their accounts without adding the whole contract.
I would prefer to use Sales Orders to send to clients confirming the sale as I want to attach their PO to my sales order. But this depends on whether the Sales Order is meant to be sent to clients or whether I am meant to send the pro-forma invoice.
I have seen posts in Manager saying that sales quotes are the same things as pro-forma invoices, but I disagree because a quote does not constitute acceptance of an order. Once the order has been accepted either the sales order or pro-forma invoice kicks in as I understand it.
A Pro-forma invoice is subject to change and so is similar to a Sales Quote, and both of these would require purchaser acceptance.
A Sales order is confirmation of an agreement. If the agreement is negotiated verbally then a Sales order could be both an external document (provided to Purchaser) and an internal document (provided to factory, dispatch department, etc).
If you have received documentation from the Purchaser (Contract or Purchase Order) then a Sales order may only be an internal document, but could also be sent to purchaser as confirmation of their order and include timeline/delivery information.
If I have understood your scenario correctly then I would suggest that a Sales order is appropriate.
The only specific uses for pro-forma invoice – at least that I know of – are:
To complete shipping procedures
To request down payment.
Of course it can be used as estimate, but it crosses quote territory in that case.
I totally agree with AJD that the Sales Order is best for your purposes but then again, there’s no additional legal benefit of issuing a sales order and there’s no harm in issuing a pro-forma invoice, in case you have a PO.
The fact of the matter is that neither a sales quote, sales order, or pro-forma invoice is a binding document on its own. None includes all the legally required elements of a contract (offer, acceptance, and consideration). And none has any financial impact in your accounting records. So they can all be used for a variety of purposes, depending on your workflow, customary practices in your market niche, expectations of customers, or requirements of officialdom.
That said, there is, of course, no pro-forma invoice transaction in Manager, per se. The sales quote was the first transaction form to allow easy customization of titles so it could be used as a pro-forma invoice, since these are often necessary for customs purposes. And the original vision was that a sales quote was an outgoing document, while a sales order was your way of entering an incoming purchase order. But none of that really matters.
None of the documents produced by Manager are a contract by themselves, but they may be part of a contract. Contracts do not need to be completely reduced to writing to be valid, and most of them aren’t.
A Sales quote I would classify as “an invitation to treat”
A Purchase order I would consider as offer and indication of agreement by the purchaser
A Sales order I would consider to be both acceptance of the offer and agreement by the Vendor.
All this is irrelevant in this case though, as the OP has a written contract.
Thanks for explaining this so well.
I think what I am looking to achieve are two specific aims.
One: I sell 10 laptops to a client (whether a new client or existing).
So I would quote them using sales Quote and ask them to send me their Purchase Order if they wish to proceed. They can use my Sales Quote to create their Purchase Order. I would attach their PO to my Sales Order. By having their Purchase Order - I have confirmation of the sale and they have the order on their accounts. I would not need to send them a Sales Order as that would be redundant - however on the CRM system they would be able to see the Sales Order which would have their Purchase Order attached.
Two: I wish to provide a one year or three year services contract to new or existing clients.
I would quote them using a pdf quote that would include the contract, schedule of services etc. My thinking was that while they could use the quote included in the contract to create their purchase order, it might be easier to send them a sales order that just has the quote and not the entire contract?
You are quite correct that because they are signing a contract, the order has been accepted at that state. There is no need to confirm the order as it has already been confirmed. It would be more accurate to state that I want to develop a process where my clients always provide a purchase order to send to me before I place any orders for them.
So I am changing the question slightly - now that I understand better what I need to achieve.
Imagine you are my customer. If I am selling you ten laptops, you would get a sales quote with a request to send your purchase order. Would you expect me to send you a sales order back after you have sent me your purchase order. Your purchase order in this instance would constitute acceptance of the order.
Same question with selling one year or three year service contract. I send you a quote with the contract. Because the quote is included within the contract - would you attach that to your purchase order or would you want a sales order (with just the pricing) from me to create your purchase order and to attach to your purchase order.
A Sales order is an internal document for the business. You would not normally send a Sales Order to the customer. It is the counterpart to their Purchase Order
I concluded that it was not practical to customise the quote to include the contract, schedule of services and to make the quote look more like a letter to a prospective client as it is effectively a proposal.
Second, I don’t want loads of new customers in Manager who never end up ordering whatever I quote them. This results in lots of inactive clients that I have never done business with - I have just have one quote.
Yes. If I send them my sales order, I would need to rename the title Order Confirmation. This is something that I may have to do anyway as the plan is to attach their Purchase Order to my Sales Order and enable them to see it on my CRM.
I think how the CRM will end up working might impact on how this plays out.
In extensive experience both selling and purchasing items from simple parts to highly complex custom-designed systems worth millions, there are two things I have never encountered:
A sales order, order confirmation, or any other accounting document going back to a customer after a purchase order has been sent to the supplier (here, I am not including progress reporting on performance when required by cost-reimbursable contracts), or
A contract that was also accompanied by a sales order and could not stand alone on both legal and pricing grounds.
Contracts often reference quotations or proposals. But in my experience, sales orders—whatever form they may take—are purely internal records of a supplier. When I have been a customer, I would never have had any use for my supplier’s sales order. I would always want to capture relevant information on goods or services purchased, pricing, and contractual terms in my own purchase order and contract.
The approach that I have been advised is to include the quote within the contract. This way everything is in one document. So that’s why I am including the quote within the contract.
Yes I am seeing that the Sales Order really is an internal form for me to attach the client’s purchase order. The contract and Purchase Orders do make the Sales order redundant from the client’s point of view - there is nothing that they can do with the sales order.
The only thing that we will need to work out on the helpdesk is how the client uploads and views the purchase order and where the contracts would be stored on the helpdesk.
In my experience, and in confirmation of what others have said, I very rarely issued or received a Sales order.
Technically though, receipt of a Purchase order does not create a contract. It says to the Vendor that they offer and agree to purchase the products(and/or services) at the price and terms in the Sales Quote (invitation to treat). The Sales order, or some other method of conveying agreement (possible verbal) to the purchaser, to supply the items in the Purchaser order will create a contract.
It may be that the Purchaser requires a higher number of items than the Vendor has in stock and acquiring additional stock may result in the need for a higher selling price.
When you use the term “contract” are you referring to a written document that is signed by both parties and a fully signed document(by both purchaser and seller) is provided to the purchaser? If not, then the document is only part of the contract.
To explain the issue that I am trying to resolve here, which is probably a bit unique.
My clients are schools and in the main I find them quite badly managed. They are trained to manage teachers and dealing with education. But from the point of view of running the school as a business - they are extremely poor and seem to have no idea how to work with suppliers.
Schools are supposed to create a purchase order before buying or paying for anything as the government regulations require it. However, in none of the schools that I work in, is this ever done and it is causing problems as highlighted above
In the case of inventory sales - it is easy for me to solve this problem - because they can easily copy my quote to their purchase order as it’s in tabular format. So I can force a process where they create a PO and they send me their PO, so I can demonstrate that they have indeed ordered the goods.
The problem that raised the whole question here is that for contracts - the quote is a sheet within the contract document and is not in tabular format. So it raised the question how the manager puts the contract onto their purchase order system as it would be easier if they had a quote or sales order in tabular format.
However, as the contract itself will be signed and I will require a purchase order from them along with the contract, I think that this will address my chief concern of making sure that they have correctly put the order, amounts and quantities onto their system and they know that this invoice is coming in due course.
The legal issue is important, but the real problem is more to have some paperwork from the client that says yes I want to order this, in this quantity and for this price. I don’t really have problems with client’s being difficult about paying for things. I am just tired of the general muddled confusion that seems to prevail in school management these days which has got worse over the years.
I have one word document that consists of the following:
Cover Page
Quote - Not from Manager, but list of services and price that they want
Contract - Start date, end date ,what services and packages, number of users and devices etc
Schedule of Service
SLA
Terms and Conditions
So in future, when I get a request for a quote for IT Services - I use this word document and effectively change the dates, name of clients, contract client details and mainly and chiefly the page where the quote is.
So in this question I was asking - would you be happy to create a purchase order using the information on the page(s) where the quote is - even though it’s not in a tabular format with description, quantities and totals on each line or would you want a sales order that would be in that tabular format.