Basics
Invoice vs estimate vs quotation: which one to send
Estimate, quotation, proforma invoice and invoice explained plainly, with a comparison table and the rule for deciding which document a job needs.
By Faiq Ahmad · 7 min read
Short answer
What is the difference between an invoice, an estimate and a quotation?
An estimate is an approximate price sent before the work, and it can move. A quotation is a firm price for a defined scope, sent before the work, and it cannot. An invoice is sent after the work and demands payment of a specific amount by a specific date.
Two others fill the gaps: a proforma invoice is a bill issued before delivery, usually for a deposit, and a receipt confirms money has already been paid.
These four words get used interchangeably, and most of the time nothing bad happens. The trouble arrives at the end of a job when a client says “but you said it would be 40,000” and you have to work out whether what you sent them was a promise or a guess.
The distinction is about commitment and timing: how binding the number is, and whether the work has happened yet.
The four documents at a glance
| Document | When | Is the price binding? | What it asks for |
|---|---|---|---|
| Estimate | Before the work | No — it can change with scope or materials | Approval to proceed |
| Quotation | Before the work | Yes, for the scope stated, until it expires | Acceptance of a fixed price |
| Proforma invoice | Before delivery | Yes | A deposit or advance payment |
| Invoice | After the work or delivery | Yes — it is the amount owed | Payment by the due date |
| Receipt | After payment | n/a | Nothing — it is a record |
Estimate
Use an estimate when you genuinely cannot know the final figure yet. Repair work where the fault is not fully diagnosed, renovation where you cannot see behind the wall, a design project where the number of rounds depends on the client — these are estimate territory.
An estimate that protects you says three things clearly:
- That it is an estimate. Put the word on the document, in the title, not in the small print.
- What could change it.“Assumes existing wiring is serviceable” is the sentence that prevents an argument later.
- How you will handle a change.“Any additional work will be agreed in writing before it starts.”
Quotation
A quotation is a commitment. You are saying: this exact scope, this exact price, and if it takes longer than I thought, that is my problem. Use it when the job is fully specified — a defined deliverable, a known quantity, a fixed set of materials.
Three things belong on every quotation:
- An expiry date.“Valid for 30 days” protects you when supplier prices move, and it quietly creates a reason to decide.
- An explicit scope. What is included, itemised. A single lump sum invites haggling; five lines invite questions you can answer.
- What is excluded. Disposal, making good, parking, out-of-hours work, third-party licences. Nearly every dispute comes from something nobody wrote down.
Once a client accepts a quotation, you are generally in a contract for that scope at that price. That is the point of it — but it is also why you should not send one for a job you have not properly scoped.
Proforma invoice
The one people forget. A proforma invoice looks like an invoice and is used to request money before delivery — typically a deposit, or a document a client's finance team needs before it can release payment.
Two rules: label it clearly as a proforma, and do not put it in your sales ledger or count it as a tax invoice. When the work is delivered, issue the real invoice, referencing any deposit already paid.
Invoice
The invoice is the bill. It says the work is done or the goods are delivered, here is what is owed, and here is when it is due. It is also the document your tax authority cares about, which is why it carries obligations the others do not:
- A unique, sequential invoice number with no gaps
- Your tax registration number, if you are registered
- Tax shown separately from the taxable amount — see how to add GST or VAT to an invoice
- A specific due date rather than “on receipt”
If you need to cancel or reduce an invoice you have already issued, do not delete it — issue a credit note against it. Deleting invoices leaves gaps in the sequence, and gaps are the first thing an auditor looks for.
Receipt
A receipt confirms money changed hands: how much, when and for what. For cash jobs it is often the only document the customer wants. It is not a substitute for an invoice in your own records, but for the person handing you money it is the proof they need.
The decision, in one rule
Ask two questions in order:
- Has the work happened? If yes, you are sending an invoice (or a receipt, if they have already paid).
- If not — can I commit to this price? If yes, send a quotation. If there are unknowns, send an estimate and say what they are.
In Invoice Spark all four documents share the same clients, the same tax settings and the same four templates, and an accepted estimate carries its line items into the invoice so the two figures cannot drift apart.
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FAQ
Document questions
- What is the difference between an invoice and an estimate?
- An estimate is sent before the work and gives an approximate price that can change if the scope or materials change. An invoice is sent after the work and is a demand for a specific amount by a specific date. An estimate is a proposal; an invoice is a bill.
- What is the difference between an estimate and a quotation?
- Both come before the work, but a quotation is a firm price for a defined scope, usually valid for a stated period, and you are expected to honour it. An estimate is an approximation for a job with unknowns in it. Use a quotation when you can specify the work exactly, and an estimate when you cannot.
- Is a quotation legally binding?
- A quotation that has been accepted by the client generally forms a contract for that scope at that price, so you are committed to it. That is exactly why a quotation should state what is excluded and how long the price is valid. Rules differ by jurisdiction, so take local advice for anything substantial.
- What is a proforma invoice?
- A proforma invoice is a bill issued before delivery, usually to secure a deposit or to let a client's finance team raise a payment. It looks like an invoice but it is not a tax invoice and should not go into your sales ledger. Issue the real invoice when the work is delivered.
- Can I turn an estimate into an invoice?
- Yes, and you should — retyping the line items is how amounts drift apart and disputes start. In Invoice Spark the accepted estimate's line items carry across into an invoice, so what you bill matches what the client agreed to.
- What do I send if the client has already paid?
- A receipt. It records that payment was made, for how much and when. If the client paid on the spot — common for cash jobs — the receipt is the only document they need, though many businesses issue an invoice marked paid so their own records stay complete.
Estimate, quotation, invoice, receipt.
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