Quote
Defining what's being sold and at what price, ready for the customer to review.
Pricing a 36-month crude oil supply contract for 50,000 barrels per month with tiered volume discounts: 2% at 1.5M barrels cumulative, 5% at 3M barrels, plus quarterly price adjustments tied to Brent futures index. Delivery FOB Houston, payment terms Net 30.
Configuring a business mobile bundle for 250 employees: unlimited talk/text, 50GB data per line, Microsoft 365 integration, mobile device management (MDM) licenses, and international roaming for 25 executive lines. Monthly recurring charge of $8,750 plus one-time $2,500 setup fee.
Quoting a custom CNC machining center with automated tool changer (24-position), 4-axis capability, coolant system upgrade, and extended 3-year warranty. Base price $185,000 with $12,000 in add-ons, 16-week lead time, and on-site installation included.
Order
Turning the accepted quote into a confirmed, executable order.
Converting the signed 36-month supply agreement into a series of scheduled monthly delivery orders, each tagged with delivery location, volume (50,000 barrels), contract reference number, and the applicable pricing tier. First delivery scheduled for Houston terminal on March 15th, 06:00 CST.
Creating a service order in the provisioning system: 250 new mobile lines linked to customer account #C-8472, device IMEI numbers registered, porting 180 existing numbers from previous carrier, activating MDM profiles, and scheduling field tech visit for March 8th to distribute SIM cards.
Generating production order #MFG-2026-1847 tied to the confirmed quote: CNC machining center, serial number assigned, engineering drawings finalized, bill of materials (BOM) released to procurement, and assembly slot reserved in production schedule for June-July with August 15th ship date.
Contract
Formalizing the commercial and legal terms both parties agreed to.
Signing a Master Supply Agreement (MSA) with price escalation clause tied to Brent crude futures, force majeure provisions covering pipeline disruptions, quality specifications (API gravity 38-42°, sulfur content <0.5%), liability caps, and dispute resolution through ICC arbitration in London.
Signing a 24-month Enterprise Service Agreement with guaranteed 99.5% network uptime SLA, $500/hour service credit for outages exceeding SLA, data privacy terms compliant with GDPR and CCPA, early termination fee of 50% remaining contract value, and annual price lock with 3% escalation in year three.
Signing a Capital Equipment Purchase Agreement with delivery terms (Incoterms EXW factory), acceptance criteria (spindle runout <0.002mm, positioning accuracy ±0.005mm verified on-site), 90-day payment milestone schedule (30% deposit, 50% at delivery, 20% after acceptance), and warranty coverage excluding consumables.
Fulfillment
Delivering the product or service that was ordered.
Physically delivering 50,000 barrels of West Texas Intermediate (WTI) crude via pipeline to Houston Ship Channel terminal, custody transfer measured by calibrated meters, quality certificates issued, and Bill of Lading #BOL-030826-4471 signed by terminal operator confirming receipt.
Activating all 250 mobile lines on the network at 00:01 on the service start date, porting completed for 180 numbers, MDM profiles pushed to devices, SMS sent to each employee with activation confirmation and support contact, and customer portal credentials delivered to IT administrator.
Producing the CNC machining center per engineering spec, running 72-hour factory acceptance test (FAT) with customer witnessing, crating for transport, shipping via specialized machinery freight to customer facility, and completing on-site installation with 8-hour site acceptance test (SAT) on August 18th.
Billing
Charging the customer for what was delivered or contracted.
Invoicing $3,450,000 for March delivery (50,000 barrels @ $69/barrel base price) with 2% volume discount applied ($3,381,000 net), plus $8,500 pipeline transportation fee. Invoice #INV-2026-03-450 issued March 16th, payment due April 15th per Net 30 terms, sent via EDI 810 transaction set.
Monthly recurring invoice for March service period: 250 lines @ $35/line base rate ($8,750), plus 18 lines exceeded 50GB data cap incurring $270 overage charges, plus 25 international roaming lines generated $840 in usage fees. Total invoice $9,860, auto-charged to customer credit card on file March 1st.
Invoicing per payment milestone schedule: $59,100 deposit invoiced at order (paid), $98,500 invoiced upon August 15th shipment with signed delivery receipt, and final $39,400 invoiced August 20th after successful site acceptance test (SAT) completion and customer sign-off on acceptance certificate.
Revenue Recognition
Recording revenue according to accounting rules, which may not match the billing date.
Recognizing $3,381,000 revenue on March 16th when custody transferred at Houston terminal and Bill of Lading signed, even though invoice was issued March 16th and payment not received until April 12th. Revenue recognition event is delivery completion, not cash receipt, per ASC 606 performance obligation.
Recognizing $8,750 base service revenue ratably over the March service period (recognized daily at $282/day), plus $1,110 in usage-based charges recognized on March 31st when billing cycle closed. One-time $2,500 setup fee from February is amortized over 24-month contract term ($104/month), not recognized immediately when billed.
Recognizing full $197,000 equipment revenue on August 20th when customer signed acceptance certificate after successful SAT, confirming all performance obligations met. Revenue not recognized at shipment (August 15th) or deposit receipt (March) because control only transferred upon customer acceptance, per ASC 606 guidance on custom equipment.
Renewal / Upsell
Extending or expanding the relationship after the initial deal.
Six months before the 36-month contract expires, renegotiating supply terms for a new 48-month agreement: increasing volume commitment to 60,000 barrels/month, updating price indexing formula to blend Brent and WTI futures (60/40 weighted), and adding optionality for delivery to alternate Gulf Coast terminals for $12/barrel premium.
At 18-month mark of 24-month contract, customer adds 50 new employee lines (now 300 total), upgrades 100 existing lines from 50GB to unlimited data plan (+$15/line/month), and adds IoT connectivity package for 200 fleet vehicle trackers at $8/device/month. Amendment increases MRR from $8,750 to $13,850.
After 18 months of CNC operation, customer purchases extended maintenance contract covering years 4-7 beyond original 3-year warranty: annual preventive maintenance visits, priority 4-hour response time, parts coverage excluding wear items (tool holders, spindle bearings), and operator retraining sessions. Contract value $68,000 over 4 years, billed annually.