How to Create and Manage Quotes in Xero (Step by Step)

Why Quotes Matter More Than Most Owners Think

A quote is usually the first formal document a prospective customer sees from your business. It sets the price, the scope, and the tone before any money changes hands. Done well, it makes you look organised and professional and moves the sale forward. Done badly, on the back of an email or a text message, it creates confusion about what was agreed and leaves you chasing scope creep later.

Xero has a built-in quotes feature that does two things at once. It gives you clean, branded quotes you can send in a few clicks, and it links those quotes directly to the rest of your accounting so an accepted quote becomes an invoice without any re-keying. For any business that wins work by pricing jobs upfront, trades, agencies, consultants, manufacturers, this is one of the most useful parts of Xero.

This guide walks through how quotes work in Xero, how to create and send one, and how to manage them so nothing falls through the cracks.

How Quotes Work in Xero

A quote in Xero is a non-accounting document. Creating one does not affect your profit and loss, your GST position, or your accounts receivable, because nothing has been sold yet. It simply records what you have offered a customer and at what price.

Each quote moves through a set of statuses: Draft, Sent, Accepted, Declined, Invoiced, and Expired. Tracking these statuses gives you a live picture of your pipeline, how much work you have quoted, how much has been accepted, and how much is still sitting with the customer waiting for a decision.

Step 1: Create the Quote

In Xero, go to Business, then Quotes, then click New Quote. The screen looks similar to an invoice. Fill in:

• Contact: The customer you are quoting. If they are new, Xero lets you add them on the spot.
• Date and expiry: The date of the quote and the date the offer lapses. An expiry date creates useful urgency and stops old quotes being accepted at prices you no longer honour.
• Line items: A description, quantity, unit price, account code, and tax rate for each item or stage of work.
• Title and summary: Optional fields that let you give the quote a clear heading and a short summary the customer sees at the top.

Take care with the account code and tax rate on each line. Even though a quote does not post to your accounts, these fields carry straight through when the quote becomes an invoice, so setting them correctly now saves editing later.

Step 2: Add Detail That Wins the Work

A quote is a sales document, so use the fields Xero gives you to make it persuasive and clear:

• Terms: Use the terms field to spell out what is and is not included, payment terms, and any conditions. This is your best protection against scope disputes later.
• Branding theme: Apply a branding theme so the quote carries your logo and looks consistent with your invoices.
• Line item descriptions: Be specific. "Supply and install 3 downlights, including materials and testing" reads far better than "Electrical work" and reduces back-and-forth.

The clearer the quote, the fewer questions you field and the faster the customer can say yes.

Step 3: Send the Quote and Track the Response

Once the quote is ready, you can email it directly from Xero or share an online quote link. The online quote is worth using because the customer can accept it with a single click, which updates the status in Xero automatically and timestamps the acceptance.

From the Quotes screen you can see every quote by status. Reviewing this list weekly tells you exactly where your pipeline stands and which quotes are worth a follow-up call. A quote sitting in Sent for two weeks is often just waiting for a gentle nudge.

Step 4: Convert an Accepted Quote to an Invoice

This is where the accounting connection pays off. When a customer accepts, open the quote and click Create Invoice. Xero carries the contact, line items, descriptions, account codes, and tax rates straight into a draft invoice. You review it, set the invoice and due dates, and approve.

For staged work, you can invoice a quote in parts rather than all at once, which suits progress claims on larger jobs. The quote stays linked so you always know how much of it has been billed.

Because the coding flows through from the quote, getting the account codes and GST treatment right at the quoting stage means your invoices, and therefore your BAS, stay accurate with no extra effort.

Managing Quotes Over Time

Keep your quotes tidy and they become a genuine sales tool:

• Review by status weekly. Chase the Sent quotes, learn from the Declined ones, and invoice the Accepted ones promptly.
• Set expiry dates. They protect your pricing and prompt customers to decide.
• Watch your acceptance rate. The ratio of accepted to sent quotes is a simple, powerful measure of how well your pricing and proposals are landing.
• Duplicate common quotes. For repeat types of work, copy an existing quote rather than starting from scratch.

How SortBooks Helps

Quotes and invoices keep the top of your revenue cycle organised, but once an invoice is paid the payment still needs to be reconciled and coded correctly in Xero. SortBooks connects to your Xero file, categorises incoming payments automatically, validates the GST treatment, and flags anything that looks off before it reaches your BAS.

The result is a clean cycle from quote to cash: Xero turns your accepted quotes into invoices, and SortBooks makes sure the money that comes back is reconciled and coded without you spending your evenings on it.

Final Thoughts

Quotes are too important to leave to scribbled emails. Xero gives you a fast, professional way to price work, track your pipeline, and turn a yes into an invoice in a single click. Set your codes and tax rates correctly at the quoting stage, use expiry dates and clear terms, and review your quotes by status each week. Do that and quoting stops being admin and starts being a sales advantage.