Invoice, quote, estimate, proforma — if you sell products or services, you'll come across all of these, and they're easy to mix up. They look similar and often contain the same line items, but they play very different roles in getting a deal done and getting paid. Here's a clear breakdown of what each one is and when to use it.
The quote (or estimate)
A quote is what you send before any work happens. It tells a potential client what you propose to charge for a defined piece of work or a set of goods. Its job is to win the deal: it sets out the scope, the price, and often the terms and validity period ("valid for 30 days"). A quote is not a demand for payment and creates no obligation to pay — it's an offer. An estimate is essentially the same thing, usually with the implication that the final figure may vary slightly.
Use a quote when a client asks "how much will this cost?" A clear, professional quote makes you look organized and helps the client say yes.
The proforma invoice
A proforma invoice sits between a quote and a final invoice. It looks almost exactly like an invoice — same layout, same line items, same totals — but it's issued before the goods or services are delivered, and it is not a demand for payment in the accounting sense. Proformas are commonly used to confirm an order, to request an advance payment or deposit, or for customs and import purposes where a document resembling an invoice is needed before the final one exists.
The key point: a proforma is not recorded as a sale in your accounts and cannot be used by your customer to reclaim tax. It's a good-faith "this is what the invoice will look like" document. Once the goods ship or the work is done, you replace it with a proper invoice.
The invoice
An invoice is the real thing: a formal demand for payment issued after (or as) goods or services are delivered. It's a legal and accounting document. It records the sale in your books, starts the clock on your payment terms, and — if you're VAT-registered — is the tax document your customer uses to reclaim input tax. An invoice has a unique sequential number, an issue date, a due date, and clearly states the amount owed.
Unlike a quote or proforma, an invoice creates an obligation to pay and must be retained for your accounting and tax records.
A simple way to remember it
- Quote / estimate — before the deal: "Here's what it would cost." No obligation to pay.
- Proforma invoice — deal agreed, not yet delivered: "Here's what the invoice will look like." Often used for deposits or customs. Not a recorded sale.
- Invoice — delivered (or in progress): "Here's what you owe, and when." A legal, recorded, tax-relevant demand for payment.
How the flow works in practice
A typical job runs quote → (optional proforma / deposit) → invoice. You quote the client, they accept, you might send a proforma to collect a deposit, then you invoice for the balance once the work is delivered. Good invoicing software lets you move through this flow without retyping anything — create a quote, and when it's accepted, convert it into a proforma or an invoice in one click, carrying over the client, line items, terms and numbering automatically. With Invoex you can produce all three document types and convert between them, so the paperwork keeps up with the deal instead of slowing it down.