An international quotation: what agreements to include

Are you placing an order with a new overseas supplier? Or will you be supplying products to a new foreign customer? Then an international quotation is part of your business contact with overseas buyers or suppliers. In this article, you will find out more about different types of international quotations and what agreements they must include

You can make a quotation for a potential customer or request one from a new overseas supplier. Quotations contain information about products, prices, transportation, delivery times, and more. The supplier makes an offer. The client accepts or rejects the offer. You can also negotiate about aspects of the quotation. 

What to include in a quotation 

Quotations should always be clear and easy to read. Write your quotation in a language your customer understands. International quotations require a bit more thought, because your customer is abroad. The same goes if you are the customer: you need to know exactly what you are committing to. Here are 15 things you should find on any international quotation. 

1. Company details 

The quotation should state your contact details and those of your potential overseas customer. Company details consist of the company name, address, city/town, and country. You should also include your Chamber of Commerce KVK number and your VAT identification number in the quotation. This information is probably in your letterhead already. 

Ask your customer for their company’s registration number before you draw up the quotation. Check it in the relevant foreign register. If the supplier or client is based in the EU, all you have to do is check their VAT identification number. If the details are correct, include the numbers in the other party's company details in your quote.  

2. Issue date and validity period 

If you use an information system like ERP, the system will automatically assign a number and date to the quotation. With a manual quotation, you will have to specify a date and number yourself. Fixed-term quotations have a validity period, while free-term quotations do not. 

3. Exact product description 

When you do business internationally, you will usually sell your products through a catalogue or website .The buyer will not have the chance to see the product before they buy it. Your quotation should clearly state what product you are offering. Include technical specifications such as the model number, drawing number, dimensions, and colour. Add quality indications for each item, so the customer can be sure that they are purchasing the right product. Describing the product in as much detail as possible will help prevent misunderstandings later on. It reduces the chance that the customer is dissatisfied with the colour, price, or specifications of the product. In the end. It may save you a return. 

4. Quantity 

Mention how many products you are offering. Indicate the quantity in units, litres, or some other measure. 

5. Additional documents needed 

Applying for and sending the required documents also costs money. These costs increase your price and are part of the process of working out your cost price when exporting goods. As such, you have to include them in your quotation. Within the EU, an invoice, packing slip, and transportation document are usually enough. If you do business outside the EU, you will usually need additional documents. 

6. HS code 

If you are sending or receiving goods to or from a non-EU country, you need a commodity or HS code. The commodity code of a product determines the import duty rate in the importing country. It also determines what documents you need to import and export the product. You can find the right code in Access2Markets. 

7. Country of origin 

When you do business with non-EU countries, you can state the country of origin in the quotation. This is the country where your product was produced. This lets your customer investigate whether any special political measures, such as sanctions, apply to products from the country of origin.

Does the EU have a trade agreement with the customer’s country? Then usually the customer will pay lower or no import duty. This only applies to EU products of preferential origin, which means they were made in the EU and meet the rules for EU preferential origin. You demonstrate this with a EUR.1 document or an invoice declaration. 

If you are an importer, you usually pay less or no import duty for products of preferential origin from a treaty country. The foreign supplier must provide you with a document or certificate of preferential origin. 

8. Price and currency 

Clearly indicate the product price and currency in your quotation. If your price is in a currency other than the euro, currency fluctuations affect your product prices. Decide in advance how long you want to run foreign exchange risk and put a validity period on your quotation. With a free-term quotation, the supplier can adjust prices at their discretion. 

9. Packaging 

Indicate how you package goods. Good packaging must meet multiple packaging requirements to prevent damage. Regulations may also apply to the use of packaging materials and symbols on packaging. In many countries, wooden packaging such as pallets, crates, and dunnage, for example, are subject to ISPM15. This is an international standard aimed at preventing the spread of live pests during transport. 

If the packaging offered does not match the requirements of your customer or the destination country, you can take action before any harm is done and offer a different form of packaging. The Netherlands Enterprise Agency has a special page on product and packaging requirements in other countries (in Dutch). 

10. Mode of transportation 

Goods can be transported by road, rail, water, or air. Each mode of transport has its own pros and cons when it comes to speed, flexibility, and costs. Logistics service providers such as freight forwarders can organise transportation to or from your business partner's country. They also handle customs clearance if you are doing business outside the EU.

Specify in your quotation how you will arrange transportation for your customer or make your needs and wishes known to your supplier. 

11. Incoterms® 

Incoterms® are standardised international transportation agreements. Agreeing on an Incoterms® rule gives clarity on who is responsible for arranging transportation and who bears the risk of damage in transit at any given time. Mention the Incoterms® rule as a Term of Delivery. State clearly which version you are using. The most recent edition of the Incoterms® was published in 2020. 

12. Delivery time 

Your customer will want to know when they can expect to receive the products. State your delivery time in the quotation. When your quotation becomes an order, you can confirm the delivery time. 

13. Form of payment 

Indicate how and when you want to be paid for the goods. Payment can be made in several ways, for example via a Letter of Credit (L/C) or prepayment. The form of payment is often not a hard requirement and there is usually room for negotiation. 

14. Warranty 

If you sell products to other companies, there are warranty rules to consider For instance, if the product is defective upon delivery or breaks within a certain period. You can include the warranty period and terms in your quotation, or refer to the warranty rules in your general terms and conditions. 

15. General terms and conditions 

Your general terms and conditions contain your rules about payment, delivery times, and warranty, among other things. General terms and conditions are not mandatory, but they can help you avoid difficulties. If a problem comes up, you can always refer to them. If you have filed your general terms and conditions with KVK, you can refer to them in your quotation. You can also choose to attach a copy. Evofenedex (in Dutch) offers extensive information on using general terms and conditions. If you are doing business with an international partner, have a lawyer draw up or check your general terms and conditions. 

Contract

If a potential customer accepts a supplier's offer, an agreement is formed. Customers usually accept a quotation by signing it, but they can also accept it verbally. The problem with verbal contracts is that you have little proof of what was agreed. Accepting a quotation in writing is better because it strengthens your legal position. 

Quotation types 

There are two types of quotations. 

• Fixed-term quotation 
  A fixed-term quotation is valid until a certain date. During this period, the supplier is obliged to comply with their offer and cannot withdraw their proposal until after the quotation expires. 

• Free-term quotation 
  A no-obligation quotation has no validity period, so the potential buyer does not have to accept it before a certain date. Before the buyer accepts the quotation, the supplier is free to amend its proposal at their discretion. For example in response to higher raw material costs. Suppliers may also withdraw free-term quotations at any time. 

Would you like to discuss an international quotation with an adviser? Call the KVK Advice Team on 088 585 22 22.