In this tutorial, we’re going to cover how to create estimates in QuickBooks Online (QBO). Let’s begin!
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The Importance of Estimates in QuickBooks Online
An estimate, also known as a quote or a bid, is a document that provides prospective customers with a list of the products and/or services that you will provide and how much you will charge. While this form is optional, it helps potential customers determine if they want to hire you.
Below is a sample of a completed estimate created in QuickBooks Online for our fictitious company, Paul’s Plumbing:
Sample estimate created in QuickBooks Online
Why You Should Create Estimates in QuickBooks Online
As discussed, you should create estimates in QuickBooks because they assist potential clients in deciding whether or not to buy your goods/services. An estimate, quote, or bid serves as written approval to start a job. In addition, it helps to expedite customer billing and allows you to run reports to compare estimates versus actuals.
Creating estimates in QuickBooks Online provides the following benefits:
- Assist potential clients to decide whether or not to hire you – It provides the information potential customers need to decide if they want to purchase your goods/services.
- Written approval to start the job – It can serve as a written approval to work on a customer job. This documentation will serve as written proof that your customer agreed to the pricing and terms stated in the estimate/job.
- Expedite customer billing – With the click of a button, you can easily turn the estimate into an invoice in QuickBooks Online when you are ready to bill your customer for work completed.
- Run reports to analyze estimated versus actual costs – You can run reports in QuickBooks that will help you compare your estimates to actual income and costs after the work is completed.
Estimates are not a required transaction for the sales and income accounting process. No money changes hands when you create an estimate in QuickBooks, and estimates have no impact on your financial statements. However, as mentioned previously, it helps potential clients decide whether or not to hire you and expedites the billing process.
How to Create Estimates in QuickBooks Online
Creating estimates in QuickBooks Online can be done in five easy steps. Navigate to the customer center to create an estimate. For customers previously set up, the contact details will automatically populate. Otherwise, you will need to add new customers. Complete the description, quantity, and cost of the services and email the estimate directly from QuickBooks.
The five steps on how to create estimates in QuickBooks Online are:
1. Navigate to Create Estimates
Navigate to estimates from the Home page by selecting Estimate below the Customers column, as indicated below:
Navigate to the Customer Center to create estimates in QuickBooks Online
2. Create Estimate
Once the estimate form displays, you will select an existing customer from the drop-down menu or create a profile for new customers. You must complete a total of nine fields, which include estimate date and details about the product/service (such as quantity and rate), as indicated below:
Estimate form in QuickBooks Online
The fields that you need to complete to create the estimate form, along with an explanation of how that information will be used by QuickBooks are:
- Customer Name – Select the customer’s name from the drop-down. TIP: If you have not set up the customer information yet, you can do so by clicking on the drop-down arrow, scrolling up to the top of the list, and selecting Add New. A new window will open up that will allow you to enter your customer’s information. Once you have done this, you can click Save and finish your estimate.
- Customer email address – This information will automatically populate from the customer profile. If you did not enter the email address in the customer profile, then this field will be blank. TIP: You can enter the email address directly in this field and it will automatically update the customer profile.
- Billing address – This information will automatically populate from the customer profile. If you did not enter the billing address in the customer profile, then this field will be blank. TIP: You can enter the billing address directly in this field, but it will not automatically update the customer profile. You will have to go back to the customer profile and enter this information for it to auto-populate going forward.
- Estimate date – This is the date you are creating the estimate. QuickBooks will typically default to today’s date, but you can change this if needed.
- Product/Service – Select each product/service from the drop-down list. TIP: If you have not set up the product/service information yet, you can do so by clicking on the drop-down arrow, scrolling up to the top of the list, and selecting Add New. A new window will open up that will allow you to enter your product/service information. Once you have done this, you can click Save and finish your estimate.
- Description – This field will auto-populate based on the product/service you selected above. However, you can customize this description by typing directly in this field. TIP: Any custom description that you enter on this estimate will not update the description for the product/service. If you want this description to auto-populate when this product/service is selected, then you need to update the product/service information.
- Qty – If applicable, enter the quantity for each product/service.
- Rate – This field will auto-populate based on the rate you set up for the product/service selected. If you did not set up a rate, then you can enter it directly on this form. TIP: Any rate that you enter on this estimate will not update the rate for the product/service. If you want this rate to auto-populate when this product/service is selected, then you need to update the product/service information.
- Amount – QuickBooks will automatically multiply the quantity and the rate columns to calculate the amount.
There are four primary statuses for an estimate: pending, accepted, closed, and rejected. Where you are in the approval process will determine the estimate status. We will discuss how to manage the status of estimates next.
Managing the Status of Estimates in QuickBooks Online
Estimate status options in QuickBooks Online
Right below the customer name field is the estimate status field. This field allows you to keep track of where you are in the approval process for an estimate.
The four status options, along with a brief explanation of when to use each one, are:
- Pending status: Typically, this is the status used when you have created an estimate and sent it to your customer for approval.
- Accepted status: Once your customer has approved the estimate, it moves from pending status to accepted.
- Closed status: Once you have invoiced your customer in full, then QuickBooks will mark the estimate as closed.
- Rejected status: If you send a customer an estimate and they do not approve it, it would be considered an estimate that has been rejected.
TIP: You’re probably wondering why you would keep an estimate that has been rejected by a customer. Sometimes customers change their mind and decide later on that they want to purchase the product/service. In that case, you can quickly locate the estimate, make any changes requested by the customer, and change the status to accepted. This will save you time because you won’t have to create the estimate from scratch.
3. Preview Estimate
Once you have completed all of the necessary fields, you can do a print preview to see what the estimate will look like.
Click the Print or Preview button at the bottom of the screen:
Print or Preview estimate in QuickBooks Online
4. Send Estimate to Customer from QuickBooks Online
After you are satisfied with the estimate, you can either print the estimate and mail it to your customer, or you can email it directly from QuickBooks.
Save and Send Estimate via Email
To email an estimate directly from QuickBooks, click on the drop-down arrow to the right of the save and close button and select save and send, as indicated below:
Save and close estimate or Save and Send estimate in QuickBooks Online
Review Email Before Sending
Send estimate via email in QuickBooks Online
Listed below are the fields that you need to complete to send the estimate via email along with an explanation of how that information will be used by QuickBooks:
- Email: This is the email address that is saved in the customer profile.
- Subject: This is the estimate number and your company name. You can edit this information directly on this screen.
- Body: This is the information that will appear in the body of the email that your customer receives. You can edit this information directly on this screen.
Save to Send Email
Once you have made any necessary changes to the email, select the save to send queue and close button as indicated below. The estimate will be attached to the email as a PDF document.
Save and send email with estimate in QuickBooks Online
TIP: Be sure to check your email delivery settings before sending emails to your customers. We covered this in the how to set up sales form content tutorial.
5. Copy Estimate Info to Invoice
After you have saved the estimate, you will see the Copy to invoice button at the top of the form to the left of the amount, as indicated below.
Copy estimate to invoice in QuickBooks Online
Once you are ready to invoice your customer, just click this button(in the screenshot above) and it will copy all of the information on your estimate to an invoice.
Wrap Up
That wraps up How to Create Estimates in QuickBooks Online. In our next tutorial, we will walk through the importance of invoices, their impact on your financial statements, and How to Create and Send Invoices.
If you’d like to learn more about managing income, expenses, and reporting in QuickBooks, download our free, 39-course QuickBooks tutorial here.
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