Quote, estimate, proforma invoice and invoice: what is the difference?

On site, these four documents get mixed up all the time. A client asks you to "send an invoice" when they want a quote; their accounts team asks for a proforma but waits for the real invoice before paying. Each document has its own job, and sending the wrong one costs time and sometimes money.

Quote: a firm price for defined work

A quote states a fixed price, scope and terms for a specific job. In many countries, a quote that the client accepts within its validity period forms a binding contract. That is why every quote needs a validity date, a clear tax line ("prices exclude VAT") and a list of what is not included. If some prices may change, say so in writing: "Equipment prices are subject to change if the supplier's price list changes before the order date."

Estimate: an informed approximation

An estimate is your best guess when the full scope is unknown, for example replacing a heating system behind closed walls. Do not stop at the word "approximate". State what would change the figure: "If the existing pipework cannot be reused, new pipework is charged per metre." If the job will clearly go over the estimate, tell the client before you continue, not when you send the bill.

Proforma invoice: a preview for payment

A proforma invoice looks like an invoice but is not one. It is used to request a deposit, to get internal purchase approval at the client's side, or for customs and financing. It is not a tax document: the client cannot reclaim VAT on it and it does not go into the books as a sale. Even if the client pays the full amount against a proforma, you still issue a proper invoice once the goods are delivered or the work is done.

Invoice: the legal and tax record

The invoice records that a sale happened. It carries a unique sequential number, your tax details and the tax amount. Once issued, you do not edit it; you correct it with a credit note. That is why it must match the approved quote and the order confirmation line by line.

From quote to invoice: the right order

• Send the quote (Rev. 1, Rev. 2...) and follow it up.
• The client approves in writing or sends a purchase order.
• Send an order confirmation with the approved revision number, delivery date and payment terms.
• If a deposit is needed, send a proforma invoice.
• After delivery or commissioning, issue the invoice.

Common mistakes

• Giving a price on a proforma instead of a quote. The client may treat it as a confirmed sale.
• Not stating which revision was approved, so the invoice uses an old price.
• Treating a payment against a proforma as closed and forgetting the invoice.
• Writing an estimate as if it were a fixed price, then arguing about the overrun.
• Accepting an approval on an expired quote without checking prices first.

In short: the quote makes a promise, the proforma asks for money, the invoice records the sale. Tracking quotes by revision number keeps that chain intact, which is why Tekliva locks the approved version.