The devil’s in the detail - Why do quotes need to be accepted quickly?
The news is full of reports of the impact of the cost of living crisis on our household budgets. With the ever increasing cost of energy, the rising price of fuel and food to contend with you will be aware that these situations will also impact your business
All businesses in all sectors from manufacturing to financial services, are feeling the impact of the financial squeeze. The cost of raw materials has gone up exponentially due in part to the conflict in the Ukraine and the ongoing impact of the pandemic/Brexit.
I am sure you are feeling the pinch due to huge increases in gas and electric.
So what’s all this got to do with quotes? Quite a lot actually, when cashflow is stretched getting it in quickly is priority.
Part of the answer is to look at your pricing and quoting processes. In particular to make sure that you have a system in place that encourages your customers to accept your quotes within a set time frame and include conditions which could cause you to revise your quote.
A client recently shared with me the following experience; he’d quoted for a manufacturing job at the end of last year. Despite several nudges the proposed client was slow to respond and delayed accepting the quote.
By the time he responded, accepting the quote, the price of steel had increased dramatically due to the war in Ukraine and so rather than making the anticipated margin on the job my client was now making a considerable loss.
The reason for this was simple, he’d not stipulated the time frame in which the quote was valid. He was therefore left with the challenge of deciding how to proceed.
Should he
- honour the original quote and make a loss
- speak to the client, explain the situation and send a revised quote with the risk that he might lose the work.
What would you do?
- Honour the original quote and make a loss – what would the business implications be? Can the loss be absorbed and recouped in the next order? or would it cause financial challenges that might ultimately risk losing the business?
- Speak to the customer and explain. – Not an easy thing to do, but this may be what they’re expecting to happen.
If you find yourself in a similar situation then it’s important to make sure you can justify the reasoning for amending the quote. Being able to demonstrate where the cost increases come from is also important as it adds credibility to your request.
The other important learning from this situation is to make sure that you have proper terms and conditions in place for your business. These should be bespoke to your business and cover all areas, and as outlined include details on for how long a quote is valid.
If you haven’t reviewed your business’ terms and conditions recently I’d highly recommend you do so; initially this can be done internally by you – although you may need external help from a solicitor.
Are they still relevant and valid for today’s trading environment, if they’re not then update them. If they are, great, but don’t forget to keep checking that they are!
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