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Create an Invoice from an Estimate in 3 Easy Steps: A How-To for Small Businesses

Creating an invoice from an estimate is a good idea because you’re copying over the line items and costs your client has already approved, according to the Houston Chronicle. It also makes invoicing much simpler, which is important because invoices are the key to getting paid.

Converting an estimate to an invoice doesn’t have to be a painful process. Accounting software makes it simple. You can also copy over the information manually using the following easy steps.

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In this article, we’ll cover:

1. Copy Over the Information

Creating an Invoice Using Accounting Software

Usually it’s quite simple to convert an existing estimate to an invoice using accounting software.

In FreshBooks, you enter the estimates page via the menu, check off the estimate you want to convert and then click “Convert to Invoice.” You can then edit the new invoice to suit your needs and send it online or print it off to send via snail mail.

Creating an Invoice Using Accounting Software

Freshbooks also has features that let you easily make estimates and invoices using professional templates.

Creating an Invoice Manually

Copy the project information from your estimate to an invoice template (you can download this free invoice template). If you’re using progressive billing, meaning you’re only invoicing for part of a project, copy over only the line items and costs you want to bill for right now.

Some small businesses prefer to bill for a percentage of the labor or material costs. Even if you’re converting an estimate to an invoice automatically using accounting software, you may need to adjust your labor or material costs manually, according to the Houston Chronicle.

You can also repurpose your existing estimate into an invoice. Use whatever format you prefer, whether it’s Word, Excel, Google Docs or PDF. In the next step, we’ll discuss what fields you need to change.

2. Customize the Invoice

Now it’s time to customize the information from your estimate to make it into an invoice.

Ask yourself first:

  • Have any of the line items or prices changed?
  • Do you want to invoice for the entire project or only part of it? If the latter, use the progressive billing techniques in step one.

The following information will remain the same:

  • Contact information for you and your client
  • Your logo
  • Services and costs from your estimate you want to invoice for

You’ll need to change the following:

  • Change the date to today’s date
  • Change the estimate number to an invoice number
  • Include a payment (or payments) due date
  • Remove any timelines or project completion dates
  • Double check you’re including the appropriate services and costs
  • Delete any estimate terms, like how long the estimate was valid for
  • Delete any notes on what services and costs are excluded from the estimate
  • Double check the sales tax and total amount due
  • Include payment terms (including how you want to be paid and any late fees)

Need help completing your invoice? This article tells you exactly how to write a professional invoice.

Here’s an example of an invoice in FreshBooks that includes all the key elements:

example of an invoice in FreshBooks that includes all the key elements

Source: FreshBooks

3. Explain Any Changes

Any line items or costs in the invoice that are different from what’s on your estimate must be cleared with the client in advance. Prepare an updated estimate first for the client’s approval. Simply submitting an invoice with unapproved changes will damage your relationship with your client and make it less likely you’ll get paid.

Once the client has approved the changes in project scope, include a note in your invoice referencing the updated estimate number. Include a separate line item with additional charges, if appropriate.

Double check your work and then send the invoice to your client. Email or print and mail it, depending on what your client prefers. Put a reminder in your calendar on the payment (or payments) due date in case you need to follow up with your client.

People also ask:

How Do You Convert an Estimate into a Tender?

You can’t convert an estimate into a tender. However, you could convert an estimate into a bid.

That said, the terms “tender” and “bid” are often used interchangeably, according to ThoughtBubble.

By definition, a tender is a document produced by a company (the buyer). It outlines the project and requests bids from suppliers.

  • For example, a government agency sends a tender to three contractors asking for bids to renovate their office. The contractors each write a bid that details how much they’ll charge to complete the project. The agency then chooses one winner from the three bids.

To convert an estimate into a bid, do the following:

  1. Review the buyer’s tender (also called a request for proposals or “RFP”). You may have prepared a general estimate before looking at the buyer’s specific requirements. The tender should include how costs should be broken down and written, according to Info Entrepreneurs.
  2. Add a detailed breakdown if the tenderasks for one. This could include staff/management/administration time and costs, estimates of reimbursable expenses and costs at each stage of the project (weekly or monthly, for example).
  3. Reevaluate your total project cost. If your bid is accepted, you’ll have to commit to this cost (unlike in an estimate which is just that, an approximation).
  4. Double check you’ve included sales taxes, mentioned what currency you’re using and write your total project cost in both words and figures.
  5. Say how long your prices are valid for.
  6. Add a disclaimer accounting for potential surprise costs or additional work and detail why you’re including this.

You can learn more about the difference between estimates, quotes, bids and proposals on the FreshBooks blog.

How to Convert an Estimate to a Purchase Order?

Let’s say your estimate is approved by your client. You need to buy materials or supplies listed in the estimate from one of your vendors.

  • For example, a painter includes in his estimate that he will need to buy two gallons of paint to complete the job. The client approves the estimate. The painter then issues a purchase order to his local hardware store for the two gallons of paint.

Accounting software will often let you automatically create a purchase order from an estimate.

You can also do this manually from a Word, Excel or PDF document. A purchase order needs to include several critical elements, according to InTouch Manufacturing Services, which are outlined below.

To convert an estimate to a purchase order:

  • Change your client’s information to your vendor information
  • Edit the date of issue to today’s date
  • Change the estimate number to a purchase order (PO) number
  • Add a shipping address for the products or goods
  • Delete any line items except for the items you want to purchase
  • Double check the sales tax and total
  • Include payment terms (how and when you’ll pay for the goods)

How Do You Turn an Invoice into an Estimate?

Perhaps you made an invoice instead of an estimate by mistake. You want to turn the invoice into an estimate. This is usually difficult to do automatically in accounting software. You may have to copy and paste the information from your invoice into an estimate template.

FreshBooks makes it easy to quickly produce and send professional estimates.

To turn an invoice into an estimate manually, edit your invoice using the following steps:

  • Change the title from “invoice” to “estimate”
  • Edit the date
  • Change the invoice number to an estimate number
  • Add any timelines and an expected completion date
  • Edit the services, if necessary
  • Edit the costs, if necessary
  • Mention any exclusions (what the project won’t include)
  • Double check sales tax and the total
  • Include any terms and conditions (for example, how additional costs will be priced)

To learn more about how to write a great estimate, check out the FreshBooks blog.

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