In this tutorial, you will learn how to create estimates in QuickBooks Online. Estimates can be used to provide quotes and bids to customers for proposed jobs.
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This tutorial is part of our series of Free QuickBooks Tutorials. The video below and the illustrated instructions that follow present the same information.
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:
Why You Should Create Estimates in QuickBooks Online
While the main purpose of creating estimates or quotes in QuickBooks is to communicate your pricing to potential customers clearly, they also serve several other purposes:
- Marketing tool: Estimates provide the information potential customers need to help them decide if they want to purchase your goods or services.
- Written approval: When a customer signs an estimate, it serves as written approval of the pricing and start date for the job.
- Expedite customer billing: When estimates are done in QuickBooks Online, you can turn the estimate into an invoice with the click of a button.
- Run reports to analyze estimated vs 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.
How to Create Estimates in QuickBooks Online
1. Navigate to Create Estimates
Click New at the top of the left menu bar and then select Estimate in the firsts column under customers:
2. Create Estimate
The create estimate screen provides fields to be completed that will carry information to the estimate form. The exact fields provided are determined by the sales form settings you choose in How to Set Up Sales Form Content.
A. Customer: Select the customer and job, if applicable. If this is a new customer, select Add new at the top of the customer drop-down list and set up the customer as shown in How to Set Up Customers. When the customer is set up properly, the fields for Email, Billing address, and Shipping should populate automatically.
B. Estimate date: Enter the date you are creating the estimate.
C. Expiration date: I highly recommend including an expiration date on your estimate. An expiration date avoids problems that might arise when a customer accepts an estimate months later when the cost of materials may have changed.
D. Service date: The service date is when you expect to start working on the job.
E. Product/Service: Select the product or service being proposed from the drop-down box. If this is a new product or service, select Add new at the top of the drop-down list and set up the product or service as explained in How to Set Up Products and Services List. When the product or service is set up properly, the Description, Rate, Tax, and Class should populate automatically.
F. Qty: Enter the quantity of the goods or services that you are proposing. Once the quantity is entered, the Amount should populate automatically as quantity times rate.
Take the time to set up your company: Creating estimates is a great example of why it is so important to complete your company set up. The majority of the estimate automatically populates if your Customers and Products/Services are set up properly. Creating estimates will be even faster if you customize your sales form content to include only the fields you need.
Managing the Status of Estimates in QuickBooks Online
Below the customer field in the estimate input screen is the estimate status. The example estimate above has a status of pending:
Click on the drop-down arrow next to Pending to change the estimate status. You can choose from four statuses to help track your outstanding estimates.
A. Pending: An estimate is pending after it is sent to a potential customer until the customer accepts or rejects the estimate or the estimate expires.
B. Accepted: Accepted estimates have been approved by the customer, and a signed copy of the estimate has been received.
C. Closed: QuickBooks will change the status of an estimate automatically to closed when the estimate is converted to an invoice.
D. Rejected: If a client informs you that they are not accepting your estimate, or the expiration date of the estimate expires, you should change the status of the estimate to rejected.
3. Preview Estimate
To preview your estimate, click on Print or Preview in the bottom menu bar of the create invoice window and then select Print or Preview again:
If you wish to make changes to the estimate, you may close the print preview window to return to the input screen.
4. Send the Estimate
Once you are satisfied with your estimate, you can either print and mail your estimate from the print preview screen above or email the estimate directly from QuickBooks Online.
Save and Send Estimate via Email
From the estimate input screen, click on the drop-down arrow next to the green Save and close button and then choose Save and send.
An email template form will open where you can accept the email defaults that you set up in How to Set Up Messages, or you can type a custom message for this estimate. A copy of the estimate will automatically be attached to the email when you click the green Send and close button.
You’ve now completed another tutorial in our QuickBooks Online Training Course. You can now create estimates and mail or email them to prospective customers. The next tutorial in our QuickBooks Online Training Course is How to Create and Send Invoices.