Proforma invoice vs invoice vs quote: what's the difference?
A proforma invoice is a preliminary bill sent before the work or delivery. Here's how it differs from a quote, an estimate and a final invoice, and when to use each.
Small businesses send several documents that look alike: estimates, quotes, proposals, proforma invoices and invoices. They do different jobs. Using the right one avoids confusion about what the client has agreed to and what they owe.
The quick version
| Document | When | Is it a bill? |
|---|---|---|
| Estimate | Before the job, a rough price | No |
| Quote | Before the job, a fixed price for a set scope | No |
| Proposal | Before the job, scope + price + terms for approval | No |
| Proforma invoice | Before delivery, a preview of the final invoice | No (but may be used to collect prepayment) |
| Invoice | After (or during) the job, a request for payment | Yes |
What is a proforma invoice?
A proforma invoice is a preliminary invoice sent before goods are shipped or work is delivered. It shows what the final invoice will look like: items, quantities, prices, taxes, shipping and terms.
It's used when:
- A buyer needs it to arrange payment or financing, or to get internal approval.
- You require payment in advance before shipping.
- Goods are crossing borders and customs needs a declared value ahead of time.
A proforma invoice usually isn't recorded as revenue or as an amount owed in your books, because the sale hasn't happened yet. Once you deliver, you send a regular invoice with its own invoice number.
Quote vs estimate
An estimate is your best guess and can change. A quote is a firm price for a defined scope, often valid for a set period ("valid for 30 days"). If the scope changes, you issue a new quote or a change order.
Proposal
A proposal goes further than a quote: it describes the work, the timeline, the price and the terms, and asks the client to approve it. Once approved, it becomes the basis for the invoice. It's the right choice for service businesses and contractors.
Invoice
An invoice is the actual request for payment, with an invoice number, a due date and how to pay. Here's how to write one.
Which should you use?
- Service businesses and contractors: send a proposal, take a deposit, then invoice.
- Product sellers who need prepayment, or exporters: send a proforma invoice, then the final invoice on shipment.
- Quick jobs: a quote and an invoice are enough.
Proposals and invoices in Invoicefy
In Invoicefy you send a proposal your client can approve online, then convert it into an invoice in one click with all the line items carried over. Clients pay from a private link by card or PayPal.