Guide
Quotation vs Invoice: Key Differences Explained
Many business owners use βquotationβ and βinvoiceβ interchangeably, but they serve very different purposes. This guide explains the difference and when to use each.
Quotation
A quotation (or quote) is a document provided to a potential buyer before a sale. It outlines the proposed price, scope of work, and terms. Its purpose is to help the buyer decide whether to proceed.
- Sent before the transaction
- Not a demand for payment
- Often has an expiry date
- Can be negotiated
Invoice
An invoice is a formal request for payment issued after goods or services have been delivered. It lists what was provided, the amount due, and payment instructions.
- Sent after delivery
- Demands payment
- Has a due date
- Legally enforceable
Side-by-Side Comparison
| Aspect | Quotation | Invoice |
|---|---|---|
| Timing | Before sale | After delivery |
| Purpose | Propose price & scope | Request payment |
| Legal status | Offer (not binding until accepted) | Legally enforceable demand |
| Payment | No payment requested | Payment due by a date |
| Negotiation | Can be revised | Fixed (unless credit note issued) |
| GST requirement | Quote can be without GSTIN | GSTIN mandatory for GST invoices |
| Accounting | Not recorded as income | Recorded as accounts receivable |
| Expiry | Often has validity period | No expiry (payment overdue possible) |
When to Use a Quotation
- β’ A client asks for a price estimate before committing to a project.
- β’ You want to formalize the scope and cost before starting work.
- β’ You're bidding for a contract against other vendors.
- β’ The project involves custom work where pricing may vary.
When to Use an Invoice
- β’ You have delivered the product or completed the service.
- β’ You need to formally request payment from a client.
- β’ You need a document for GST compliance and tax filing.
- β’ You want to track accounts receivable and overdue payments.
Pro Tip: Convert Quotations to Invoices
With Turnivo, you can create a quotation first, and when the client accepts, convert it to an invoice with one click β all line items, pricing, and terms carry over automatically.
Frequently Asked Questions
Can a quotation be used as an invoice?βΌ
No, a quotation is not a valid invoice. A quotation is an estimate provided before the sale, while an invoice is a formal request for payment after the goods or services have been delivered.
Do I need both a quotation and an invoice?βΌ
For most business transactions, it is good practice to issue both: a quotation to set expectations and agree on price, and an invoice to request payment after delivery.
Is a quotation legally binding?βΌ
A quotation is generally not legally binding until the buyer accepts it. Once accepted, it can form a binding contract. An invoice, on the other hand, represents an amount due and is legally enforceable.