Invoice vs Quotation: What Is the Difference?
A quotation offers to do work at a price. An invoice demands payment for work already agreed or delivered. Sending the wrong one either makes you look premature or leaves you with no record of what was agreed.
Side-by-side comparison
| Quotation | Proforma invoice | Invoice | |
|---|---|---|---|
| Purpose | Offer a price | Show expected charges before supply | Request payment |
| Sent when | Before agreement | After agreement, before delivery or payment | At or after delivery |
| Creates a debt | No | No | Yes |
| Enters your books as revenue | No | No | Yes |
| Typically numbered | Own sequence (QUO-) | Own sequence (PI-) | Strict invoice sequence |
| Expiry | Usually 14 to 30 days | Usually stated | Not applicable, has a due date |
What belongs on a quotation
Building the quotation with the same line items you will later invoice removes an entire class of dispute, because the two documents can be compared row by row.
- Clear scope: what is included and, just as important, what is not.
- Price breakdown with the same line structure your invoice will use.
- Validity period after which the price may change.
- Assumptions, for example site access or client-supplied materials.
- Acceptance method: signature, email approval or purchase order.
Estimates are not quotations
An estimate is an informed guess and can change as work progresses. A quotation is a firm price for a defined scope. Label the document honestly; calling a rough estimate a quotation and then billing more is the fastest way to lose a client.
If genuine uncertainty exists, quote a firm price for the defined part and an hourly rate for the variable part.
Converting a quotation into an invoice
When the client accepts, keep the accepted quotation, then create the invoice with the same agreed line items, add the invoice number and dates, account for any deposit, and reference the quotation number. If you saved a draft in this generator as JSON, you can import that draft to reuse its line-item wording. This does not automatically convert a quotation or record a payment; review the document title, dates, totals and notes before exporting.
Further reading: Record invoices and payments in a register · Build the final invoice step by step
Worked example: an accepted quote becomes a final invoice
In this fictional USD example, a client accepts QUO-104 for a defined repair job. Labour is 3 hours at USD 80 and parts cost USD 60, giving an agreed price of USD 300. The client pays USD 100 in advance. After completing the same scope, the supplier issues INV-1042, references QUO-104 and identifies the advance payment so the remaining USD 200 is clear. Tax and fees are omitted for illustration, not because they are always exempt.
| Detail | Quotation QUO-104 | Final invoice INV-1042 |
|---|---|---|
| Purpose | Offer the repair at an agreed price | Request the remaining payment |
| Labour: 3 hours × USD 80 | USD 240.00 | USD 240.00 |
| Parts | USD 60.00 | USD 60.00 |
| Agreed job total | USD 300.00 | USD 300.00 |
| Advance already received | Not yet paid | USD 100.00 |
| Remaining payment | Payment schedule to be agreed | USD 200.00 |
| Reference and deadline | Quote validity and acceptance terms | QUO-104 and the agreed payment due date |
Frequently asked questions
Can a quotation be legally binding?
In many jurisdictions an accepted quotation forms a contract for that scope and price. Include a validity period and clear assumptions so the offer does not stay open indefinitely.
When should I use a proforma invoice?
When a client needs a formal document to release funds or clear customs before you supply, but you do not yet want to book the revenue. Mark it clearly as proforma.
Do quotations need their own numbers?
Yes, in a separate sequence such as QUO-2026-011, so quotations never consume invoice numbers.
Sources and further reading
Rules differ by country. Confirm the details for your own situation with the official guidance below before relying on this article.
More reading: how to create an invoice, invoice numbering, payment terms, invoices vs quotations, common mistakes and small business invoicing. Practical questions are answered on the FAQ page.
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