Invoicing
Invoice vs Quotation: What's the Difference?
Understand when to send a quotation versus an invoice, and how using both documents protects your business Cashflow.
BizTools TeamAugust 15, 20264 min read
While invoices and quotations both itemize products and prices, they are issued at completely different stages of a business transaction.
What Is a Quotation?
A quotation (or estimate) is sent before work begins or goods are delivered. It details proposed costs, quantities, validity deadlines, and execution terms for a potential client to approve.
- Purpose: Proposal / Price Agreement
- Issued: Before work starts
- Payment Request: No
- Legally Binding: Once accepted by buyer within validity period
What Is an Invoice?
An invoice is sent after work is completed or products are delivered. It acts as an official demand for payment and creates a legal accounting record.
- Purpose: Payment Request & Legal Record
- Issued: After work completion
- Payment Request: Yes
- Legally Binding: Yes
Summary Comparison Table
| Feature | Quotation | Invoice |
| Timing | Before project kickoff | After project delivery |
| Goal | Client approval & scope agreement | Demanding payment |
| Payment Status | Not Paid / Pending | Due / Overdue |
| Valid Until | Specifies expiry date | Specifies due date |
How to Workflow Quotations and Invoices
- 1Send a Quotation with scope and deposit terms.
- 2Upon client approval, perform the work.
- 3Issue an Invoice for the final payment.
- 4Issue a Receipt upon receiving payment.