Word is bond. Rarely.
Quote is bond. Usually.
How do we make “usually” into always? How can we create the right expectations with customers that the quote we sent is (or can be) the contract? How do we set up our systems — CRM, price quote software, ERP, etc. — to support this ever-critical task?
Quote to cash, quote to contract
So, first the bad news: a sales quote is rarely legally binding, but it can feel that way to prospects and sales reps alike (hence the “usually” above). They signed the quote = we’re good to go.
While that’s essentially true, you would be remiss in your duties as a business person by moving forward with a project without a signed contract. Proposals are for negotiating, a starting point for a business relationship. Even if your prospect agrees to everything in your proposal, a contract is still required.
This is why everything in your proposal has to be what we call “contract-ready.” If they sign off on the information presented in your proposal, chances are great that when they see that information repeated in a contract, a signature will be forthcoming.
So create the product and pricing configurations in your proposal as if they were being presented in a contract. You don’t need to get into the minutiae of, say, late payment penalties or IP or confidentiality or what have you in your sales quote. But you do need to lock down pricing and products.
What separates a quote from a contract?
In the end, what differentiates a signed sales proposal from a signed contract is simply the details: the terms & conditions, the disclosure statements, the restrictions around intellectual properties, the legalese.
The most meaningful content in any contract will likely have already been presented, configured, and signed off on within your price quote software solution (assuming you’re using a solution that has the ability to capture signatures and the like).
You can add content and functionality to your quoting software that enables turning a quote into a contract — a contract template that can include the quote information, along with the required, binding legal language.
The central thing to keep in mind when building a sales quote is that the information therein is almost always the foundation, and often the major infrastructure, of the binding contract that follows. So ensure that all negotiating around pricing and payment terms happens during the sales proposal process.
When your prospect receives your contract, chances are very, very good they’ll skim much of it and simply ensure that what was discussed during the quoting process (call it “the draft”) is what’s in the contract (call it “the final”).
Ideally, all that happens when the contract arrives is your customer does some double-checking to ensure that all the same ducks are still in the same rows, and then it’s signed, sealed, delivered.
