QuickBooks Online: How to Create & Manage Estimates — and Convert Them to Invoices

Overview

An estimate in QBO (also called a quote or proposal) is a non‑posting sales form. It lets you spell out scope, quantities, and pricing without affecting your books until you convert it to an invoice. Estimates can be sent via email for approval, accepted or declined by the customer, and—once accepted—turned into one or more invoices (full or partial) with a clear audit trail.

The Sales center in QBO includes the Estimates tab where you can filter by status and date, sort, edit, convert, or close estimates. For phased jobs, turn on progress invoicing to bill percentages or specific amounts over time. You can also request a deposit on an estimate to collect an upfront payment securely.

Before You Start

• Products & services: Set up the items you sell (service rates, SKUs). This speeds up estimate entry and keeps pricing consistent.
• Branding: Customize your sales forms (logo, color, columns) so estimates and invoices present a consistent, professional look.
• Progress invoicing: If you bill in phases, enable it at Settings → Account and settings → Sales → Progress invoicing.
• Payments & deposits (optional): If you plan to collect deposits online, make sure QuickBooks Payments is set up so customers can pay directly from the estimate.
• Terms & expiration: Decide standard payment terms and set an expiration date on quotes to avoid price disputes.

Step‑by‑Step: Create an Estimate

1. Go to + New → Estimate.
2. Select the Customer. If it’s a new contact, choose + Add new and enter at least a display name.
3. Enter an Estimate date and an Expiration date (recommended).
4. Add Products/Services. Quantities and rates can be edited per line. Use Message on estimate to outline scope or assumptions.
5. (Optional) Add Attachments (proposal PDF, drawings) to keep everything with the transaction.
6. Click Save, or choose Review and send to email the estimate immediately.

Send, Track, and Update Status

When you email an estimate from QBO, the recipient can accept or decline directly from the email page. QBO updates the status automatically, and the activity log shows when it was viewed and accepted.

• Status values: Pending, Accepted, Converted, Closed, and Declined.
• Manual updates: From Sales → Estimates, open the action menu to mark as Accepted/Declined/Closed if needed.
• Reminders: If your estimate is expiring soon, resend with a friendly note or revise the quote.

Request a Deposit on an Estimate (Optional)

For larger jobs or to secure bookings, include a deposit request on the estimate. You can request a fixed dollar amount or a percentage of the estimate total. When the customer pays from the estimate, QBO records the payment and applies it automatically to the invoice when you convert.

1. Open the estimate and select Request deposit.
2. Choose $ to enter a specific amount or % to enter a percentage.
3. Send the estimate. The email includes a secure payment link.

Bill in Phases with Progress Invoicing

Progress invoicing lets you convert a single estimate into multiple invoices—ideal for milestone billing or long projects.

1. Turn on progress invoicing at Settings → Account and settings → Sales.
2. From the accepted estimate, choose Convert to invoice and select how much to bill:
   • Total of the estimate
   • A percentage of each line (e.g., 30% deposit, 40% mid‑project, 30% on completion)
   • Custom amount for each line
3. Save and send each invoice as work is completed.

Each progress invoice includes a summary that ties back to the estimate, showing amounts previously invoiced and remaining—so both you and the customer can track progress clearly.

Convert an Estimate to an Invoice

1. Go to Sales → All sales (or Sales → Estimates) and locate the estimate.
2. Open the Action menu and select Convert to invoice.
3. Review terms, dates, items, and any deposit that should be applied.
4. Click Review and send to email the invoice, or Save if you’re not ready to send.

Manage the Estimates Tab

Use Sales → Estimates to manage your pipeline:

• Filter by status (Pending, Accepted, Declined, Converted, Closed) and by date range.
• Sort columns (Date, Customer, Amount, Status) to prioritize follow‑ups.
• Bulk actions: Print, send, or export lists when preparing internal reviews.
• Cleanup: Mark non‑moving quotes as Declined or Closed to keep forecasts realistic.

Useful Reports

• Estimates by Customer: Totals and counts per customer—great for reviewing open pipeline.
• Estimates & Progress Invoicing Summary by Customer: For milestone billing, this report shows original estimate amounts versus invoiced to date and remaining to bill.
• Projects (if enabled): Use Estimates vs. Actuals to compare planned vs. realized income/cost at the project level.

Real‑World Scenarios

1) U.S. Small Business Owner Managing Monthly Cash Flow

You’ve sent five estimates for upcoming work. Two were accepted with deposits paid. In the first week of the month, filter the Estimates tab by Accepted to see what should convert soon. Run Estimates & Progress Invoicing Summary by Customer to forecast next month’s billing and identify projects that need follow‑up.

2) Travel Agency Selling Tour Packages (Deposit + Milestones)

Create a single estimate with line items for the package and add‑ons. Request a 30% deposit to reserve dates. Convert to a progress invoice for the balance when tickets are issued, and a final invoice just before travel—each linked back to the same estimate for a complete trail.

3) Wellness Clinic Quoting Treatment Plans

Build an estimate for a multi‑visit plan (initial consult, sessions, supplements). Use an expiration date to keep pricing current. When the patient commits, convert to invoices in phases (e.g., 50% now, balance after session three). Use Projects to view estimated vs. actual by plan.

Common Mistakes to Avoid

• Leaving accepted quotes as Pending: Status drives follow‑ups and reporting. Update to Accepted or Converted promptly.
• Skipping the expiration date: Without an expiry, pricing disputes increase. Always set a reasonable validity window.
• Not enabling progress invoicing for phased jobs: You won’t see the percentage/custom options when converting unless it’s turned on.
• Collecting deposits outside QBO: This leads to double entry and missed links. Use the deposit request so payments apply automatically.
• Editing an accepted estimate after billing begins: Material scope changes deserve a revised estimate or change order to preserve history.
• Deleting declined estimates: Keep them for reference and analytics; mark as Declined instead.

Helpful Tips & Best Practices

• Rename customer‑facing label: Prefer “Quote”? Customize the form so the PDF shows “Quote” while QBO still treats it as an estimate internally.
• Use custom fields: Add fields like Job site or PO required to capture operational data up front.
• Standard notes: Save boilerplate terms (warranty, exclusions, delivery windows) in your template to avoid retyping.
• Estimate numbering: Adopt a consistent prefix (e.g., EST‑2025‑####) so you can filter and reference quickly.
• Attachments as evidence: Keep acceptance emails and signed PDFs attached to the estimate for audit trails.

Legal & Compliance Notes

This guide is for general information only—consult your advisor for your jurisdiction. In many states, an estimate or quote becomes binding only when accompanied by clear terms and evidence of acceptance (e.g., customer click‑accept or signed copy). If you collect deposits, disclose your cancellation, rescheduling, and refund policies. Treat deposits as liabilities until earned, and ensure sales tax handling for prepayments follows local rules.

Troubleshooting & What’s New

• Can customers accept online? Yes—when they use the emailed link. If you don’t see accept/decline, resend from within QBO or verify the customer email address.
• Missing progress options on convert: Turn on progress invoicing in Account and settings → Sales.
• Deposit field not available: Ensure the new estimate layout is enabled and that Payments is active for online collection.
• Items not carrying over: If an item was made inactive or changed, re‑add it to the invoice or update the product/service list.

FAQ

Can I change the word “Estimate” to “Quote” on what the customer sees?
Yes. Customize your sales form so the customer‑facing PDF and email say “Quote,” while QBO still tracks it internally as an estimate.

Do estimates impact revenue or A/R?
No. They are non‑posting. Revenue and receivables are created only when you convert to an invoice.

How do I split billing across milestones?
Enable progress invoicing, open the accepted estimate, select Convert to invoice, and choose percentage or custom amounts for each line.

Can I request a deposit right on the estimate?
Yes. Add a deposit as a dollar amount or percentage; when paid online, it applies automatically to the future invoice.

Where do I find all my estimates?
Go to Sales → Estimates. Filter by status and date, sort by amount, and use the action menu to edit, resend, convert, close, or decline.