Quotation Validity Period

Quotation Validity Period

The validity period of a sales quotation defines how long the quoted prices and terms remain valid. Setting appropriate validity periods helps manage customer expectations and protects your business from price fluctuations.

What is a Quotation Validity Period?

A quotation validity period is the timeframe during which the prices, terms, and conditions mentioned in the quotation are guaranteed to remain the same. After this period expires, the quotation may no longer be valid, and prices or terms may need to be renegotiated.

Why Set a Validity Period?

Setting a validity period is important for several reasons:

• Price Protection: Protects you from price changes in raw materials or market conditions
• Clear Expectations: Sets clear expectations with customers about when the quote expires
• Inventory Management: Helps manage stock availability and pricing
• Business Planning: Aids in forecasting and planning based on valid quotations
• Legal Clarity: Provides clarity on offer validity in business transactions

How to Set Quotation Validity Period

Step 1: Create or Edit Quotation

1. Navigate to Sales → Sales Quotation
2. Create a new quotation or open an existing one

Step 2: Set Validity Date

Look for the "Valid Until" or "Validity Date" field:

• Enter the date until which the quotation remains valid
• This is typically a date in the future from the quotation date
• Common validity periods are 7, 15, 30, 60, or 90 days

Step 3: Configure Default Validity Period (Optional)

You can set a default validity period in settings:

1. Go to Settings → Sales Settings
2. Look for "Quotation Settings" or "Default Quotation Validity"
3. Set the default number of days (e.g., 30 days)
4. This will automatically populate when creating new quotations

Common Validity Periods

Typical validity periods vary by industry and business type:

Short-term (7-15 days)

• Used for products with volatile prices
• Perishable goods or time-sensitive services
• High-value or custom orders
• Market-dependent pricing

Medium-term (30-60 days)

• Standard products and services
• Most common validity period
• Balances flexibility with price protection
• Suitable for most B2B transactions

Long-term (90+ days)

• Stable pricing products
• Long-term contracts or agreements
• Bulk orders with fixed pricing
• Annual contracts or subscriptions

Validity Period Best Practices

1. Consider Your Business Type

• Service businesses may use longer validity periods
• Product businesses with fluctuating costs may use shorter periods
• Custom orders may require specific validity based on complexity

2. Factor in Market Conditions

• During stable markets, longer validity periods are feasible
• During volatile markets, shorter periods protect your margins
• Consider seasonal variations in pricing

3. Customer Relationship

• Long-term customers may get extended validity
• New customers may have standard validity periods
• VIP customers might receive special terms

4. Product Characteristics

• Standard products: Longer validity
• Custom products: Shorter validity
• High-value items: Consider shorter periods
• Bulk orders: May negotiate longer validity

Managing Expired Quotations

Automatic Status Update

EquiBillBook can automatically update quotation status to "Expired" when the validity date passes:

• System checks validity dates regularly
• Updates status automatically
• You can still view and convert expired quotations if needed

Handling Expired Quotations

When a quotation expires, you have several options:

Option 1: Create a New Quotation

• Review current prices and terms
• Create a new quotation with updated validity
• Send to the customer

Option 2: Extend Validity

• If prices haven't changed, extend the validity period
• Update the "Valid Until" date
• Notify the customer if necessary

Option 3: Honor the Expired Quotation

• If business conditions allow, you can still convert an expired quotation
• Review prices before conversion
• Update terms if necessary

Validity Period Notifications

Set up notifications to stay informed about quotation validity:

• Expiry Reminders: Get notified before quotations expire (e.g., 7 days before)
• Expiry Alerts: Receive alerts when quotations expire
• Follow-up Reminders: Reminders to follow up on quotations nearing expiry

Validity Period in Quotation Templates

Include validity period information in your quotation templates:

• Display the validity date prominently
• Add terms like "This quotation is valid until [Date]"
• Include conditions about price changes after expiry
• Make it clear and visible to customers

Legal and Business Considerations

• Contract Terms: Validity period forms part of your offer terms
• Price Protection: Protects you from honoring outdated prices
• Customer Communication: Clear validity periods reduce disputes
• Business Flexibility: Allows you to adjust pricing based on market conditions

Reporting and Analytics

Use validity period data for:

• Tracking quotation expiry rates
• Analyzing conversion rates before expiry
• Identifying optimal validity periods for your business
• Planning follow-up activities
• Forecasting based on valid quotations

Common Scenarios

Scenario 1: Customer Requests Extension

If a customer needs more time:

1. Review current pricing and market conditions
2. Decide if you can extend without price changes
3. Update the validity date if extending
4. Or create a new quotation with updated terms

Scenario 2: Price Changes During Validity

If prices change before expiry:

• You're typically bound by the quoted prices until expiry
• Consider creating a new quotation if significant changes occur
• Communicate with the customer if necessary

Scenario 3: Converting Near Expiry

When converting a quotation close to expiry:

• Verify that prices are still accurate
• Confirm stock availability if applicable
• Proceed with conversion if everything is valid

Best Practices

• Set realistic validity periods based on your business needs
• Communicate validity periods clearly to customers
• Monitor expiring quotations regularly
• Follow up with customers before quotations expire
• Review and adjust default validity periods based on experience
• Use expiry reminders to maintain customer relationships
• Document any extensions or changes to validity periods

Related Articles

Learn more about:

• Creating Sales Quotations
• Quotation Status Management
• Sending Quotations to Customers