Quotation, proforma invoice, invoice or receipt: which one do you need?

These four documents look similar, since they all list items and prices, but each one has a different job. Sending the right one at the right moment avoids confusion about whether money is owed.

Quotation (or estimate)

When: before any work is agreed. What it says: "this is what we would charge." A quotation is an offer. It usually has an expiry date ("valid until") and becomes binding only when the customer accepts it, which is why many quotations include a space for the customer's signature. An estimate is usually understood as a rougher guide that may change, while a quotation is a firmer price; make the wording clear on your document.

Proforma invoice

When: after the customer agrees, but before you deliver or before they pay upfront. What it says: "this is what the final invoice will look like." Proforma invoices are common for advance payments and international shipments (for example, so a buyer can arrange payment or import permits). A proforma is generally not a demand for payment and not a tax invoice; you issue the real invoice later.

Invoice

When: once goods are delivered or work is done (or as agreed, for example monthly). What it says: "please pay this amount by this date." The invoice is the official request for payment and the record used for accounting and tax.

Receipt

When: after you have been paid. What it says: "we received this money." A receipt confirms payment. If the customer paid only part, the receipt can show the balance still outstanding.

A typical sequence

1. Customer asks for a price: send a quotation.
2. Customer accepts and must pay a deposit: send a proforma invoice (optional).
3. Work is delivered: send the invoice, quoting the quotation number.
4. Customer pays: send a receipt.

If something on an invoice was wrong, don't edit or delete it; issue a credit note and, if needed, a new invoice.