What Is a Quote? Invoice vs Quote Explained
Published February 15, 2024 • 5 min read
When running a business, you'll regularly send documents to clients before and after completing work. Understanding when to use a quote versus an invoice can prevent misunderstandings, protect your income, and streamline your billing process.
What Is a Quote?
A quote (also called a quotation) is a document sent to a potential client before work begins. It outlines the proposed price for specific goods or services. When a client accepts a quote, it becomes a binding agreement — you commit to delivering the work at the quoted price.
Quotes are typically valid for a set period (e.g., 30 days), after which the pricing may change due to material costs or availability.
What Is an Estimate?
An estimate is similar to a quote but less binding. It's an approximate cost given when the final price is uncertain — for example, if the scope of work may vary. If you tell a client "this project will cost approximately $2,000–2,500," that's an estimate. If you commit to "$2,200 exactly," that's a quote.
What Is an Invoice?
An invoice is a formal request for payment sent after work is completed (or at agreed milestones during a project). It's a legal document that records the transaction and is used in both parties' accounting records.
Quote vs Invoice: Key Differences
| Quote | Invoice | |
|---|---|---|
| Timing | Before work begins | After work is done |
| Purpose | Offer a price | Request payment |
| Binding? | Yes, when accepted | Yes, legally required |
| Payment due? | No | Yes |
| Validity period | Usually 30 days | Until due date |
When Should You Send a Quote?
- →A client asks for pricing before committing to the project.
- →The project is large enough that the client needs approval from their management.
- →You're competing against other suppliers and the client is comparing prices.
- →Local regulations require written quotes above a certain value.
- →You want to protect yourself from scope creep — the quote defines exactly what's included.
The Quote-to-Invoice Workflow
The standard workflow starts with a quote. Once the client approves it, you complete the work. Then you send an invoice — often referencing the original quote number — and await payment.
Tips for Writing Better Quotes
- ✓Be specific about what's included and what's not — prevents scope creep.
- ✓Include your payment terms (e.g., 50% upfront, 50% on completion).
- ✓State the quote's validity period clearly.
- ✓Add a professional cover note explaining your approach and value.
- ✓Follow up after 5–7 days if you haven't received a response.
What Is a Credit Note?
A credit note (or credit memo) is issued when you need to cancel or reduce a previously sent invoice. For example, if a client was overcharged, you issue a credit note for the difference. It's the opposite of an invoice — instead of requesting payment, you're acknowledging a credit owed to the client.
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