Invoice vs Quotation: What Is the Difference?

The short answer

A quotation is a formal offer stating what you will supply and what it will cost, valid for a set period. It creates no obligation to pay because no work has been done yet.

An invoice is a payment request issued after goods are delivered or services are completed. It records a debt and tells the client how much to pay and by when.

Put simply: quote first to win the work, invoice afterwards to get paid.

When to send a quotation

Send a quotation when a prospective client has asked what something will cost and you can commit to a firm price. Quotations are standard in trades, manufacturing, consulting and any service business that scopes work before starting.

Always give the quotation an expiry date. Material costs and your availability change, and an open-ended quote can be accepted months later at a price that no longer works for you. Fourteen to thirty days is typical.

• A quotation number and issue date
• A validity or expiry date for the quoted price
• An itemised breakdown of the work with quantities and rates
• The total quoted price and currency
• What is explicitly included and excluded
• Payment terms that will apply once accepted

When to send an invoice

Send an invoice once you have delivered the goods or completed the work, or at agreed milestones on a longer project. For larger jobs many businesses invoice a deposit up front, then the balance on completion.

The invoice should reference the accepted quotation where one exists, so the client can match the amount charged against the price they agreed to.

• A unique, sequential invoice number
• The issue date and a clear payment due date
• Itemised goods or services with quantity and rate
• Subtotal, discount, tax rate and tax amount
• The total amount payable
• Payment instructions and bank or payment details

Quotation vs estimate

A quotation is a fixed price you commit to. An estimate is your best approximation of what the work will cost, given that the full scope is not yet known.

Label the document accurately. Clients reasonably treat a quotation as binding for its validity period, so if the scope is genuinely uncertain, send an estimate and explain what could change the final figure.

Where a proposal fits in

A proposal is a quotation with context. Alongside the pricing it sets out the executive summary, the proposed solution, the scope of work, the deliverables, the timeline and often signature blocks for acceptance.

Use a quotation when the client already knows exactly what they want and only needs a price. Use a proposal when you still need to persuade them, or when the scope and timeline need to be agreed in writing before work begins.

And a receipt?

A receipt is proof that payment has been received. It comes last, after the client has paid the invoice.

The full lifecycle for most businesses is: quotation or proposal to agree the work, invoice to request payment, receipt to confirm payment was made.