Quotation vs Invoice: What Is the Difference?
A quotation is the price you offer before the customer agrees to buy. An invoice is the bill you raise after the goods are supplied or the work is done. One asks "Do you want this at this price?"; the other says "Please pay this amount."
Small business owners often mix them up, especially when the same items appear on both. This page explains the difference in plain words, the order in which the documents are used, and the related documents you will come across: estimates, proforma invoices and receipts.
Quotation vs invoice at a glance
| Quotation | Invoice | |
|---|---|---|
| When it is sent | Before the sale, after an enquiry | After delivery or completion of work |
| Purpose | To offer a price and win the job | To ask for payment |
| Can it change? | Yes, it can be revised and resent | Should not be edited once issued; issue a credit or debit note instead |
| Validity | Valid for a stated period, like 15 days | Has a due date for payment |
| Tax | Shows estimated tax; no tax is charged yet | A tax invoice is the document on which GST is charged |
| Numbering | Own series, e.g. QT/2026-27/014 | Separate, continuous series, e.g. INV/2026-27/009 |
| Customer's action | Accepts, negotiates or rejects | Pays |
The order in which you use them
For most small businesses the flow is the same, whether you sell goods, services or both.
- The customer enquires and tells you what they need.
- You send a quotation with items, quantities, rates and terms.
- The customer accepts, sometimes with changes. Larger customers send a purchase order.
- If you take an advance, you give a receipt for it.
- You deliver the goods or finish the work.
- You raise the invoice for the final amount, adjusting any advance already paid.
- The customer pays the balance.
Why the difference matters for GST
If you are GST registered, the tax invoice is the legal document for charging GST. Its number, date and contents are reported in your GST returns. A quotation is never reported; it only tells the customer what the tax is likely to be.
This is why you should not hand over a quotation as a final bill, or keep editing an invoice the way you revise a quotation. Keep the two in separate number series and let your accountant handle invoice compliance. The quotation, meanwhile, is your sales tool, and you can change it as many times as you need to close the deal.
Estimate, proforma invoice and receipt
- Estimate: an approximate cost when you cannot fix the final quantity yet, such as repair work. A quotation is a firmer offer.
- Proforma invoice: looks like an invoice but is sent before supply, often so a company can release an advance or arrange funds. It is not a tax invoice.
- Receipt: confirms money you have received, for example an advance against a quotation.
Moving from quotation to invoice without retyping
Retyping the same items from a quotation into an invoice wastes time and invites mistakes. In Quotely Pro you can convert an accepted quotation into an invoice so the customer and items carry over. If the customer pays a booking amount, you can give an advance receipt as well. All three documents are downloaded as PDFs that you can send on WhatsApp.
To get the first document right, see the quotation format checklist.
Frequently asked questions
What is the main difference between a quotation and an invoice?
A quotation is a price offer sent before the customer agrees to buy. An invoice is a bill sent after the goods or services are delivered, asking for payment. A quotation can be revised; an invoice is a final record of the sale.
Can a quotation be used as an invoice?
No. A quotation does not record a completed sale, so it cannot be used to collect payment or claim tax. Once the customer accepts and the work is done, issue a proper invoice.
Is GST charged on a quotation?
No. GST is charged on the tax invoice, not on the quotation. A quotation from a GST-registered business usually shows the expected tax so the customer knows the full amount they will pay.
What is the difference between a proforma invoice and a quotation?
Both are sent before supply. A quotation offers a price and waits for acceptance. A proforma invoice is usually sent after the customer has agreed, to confirm the amount and help them release an advance or arrange payment. Neither is a tax invoice.
Should quotations and invoices have separate numbers?
Yes. Keep a separate series for each, such as QT/2026-27/001 for quotations and INV/2026-27/001 for invoices. Invoice numbers should be continuous and unique within a financial year.