Quotes, estimates and invoices

These four documents carry the same information in nearly the same layout, which is why they get muddled. The difference is in what the reader is entitled to assume after reading each one. Getting that wrong at the start of a job causes disputes at the end of it.

The four, in the order they occur

Estimate

An estimate is a considered guess: based on what you understand so far, this is roughly what the work will cost. It signals that the figure can move. It's the right document when the scope isn't settled yet, such as a renovation before anyone has opened a wall, or a project before the requirements exist.

Write down what would move the estimate. For example: "Estimate: 4,000. This assumes the existing data can be migrated as-is; if it needs cleaning, that is separate work we would quote before starting." A client can act on a number with its assumptions attached. A number with only "estimate" written above it is likely to be remembered as the price.

Quote

A quote is a firm price for a described scope: do this specific thing and it costs this amount. Send one when you know what the work is. If the client accepts it while it's still valid, they can generally hold you to it.

Put an expiry date and a scope description on every quote. Both are often left out. Without an expiry date, the price stands indefinitely, and the client can come back with it in 8 months. A normal window is 30 days. The scope description says what you're pricing, and the number means nothing without it. In practice, disputes about quotes are usually about the scope rather than the figure.

Proforma invoice

A proforma is an invoice-style document sent before the work or before payment, usually because the client's system needs one to raise a payment against. It looks like an invoice and is labelled so it isn't mistaken for one.

It doesn't request payment of money already owed, so I recommend keeping it out of your invoice sequence. That sequence records what you've billed, and adding a document that may never become a real invoice creates gaps. Number proformas separately, or not at all. Invoice numbering covers why that sequence is worth protecting, and pro forma invoices covers the VAT side and what to send once the client pays.

Invoice

An invoice is a request for payment of an amount now owed, with a date by which it should arrive. The work is done, or the agreed stage of it is, and the money is due. The due date, payment details and description are all there so the client can pay without having to ask you anything first. Once it's paid, the document that confirms it is a receipt, and the guide to invoice vs receipt covers when a client needs one.

The distinction that costs money

The document decides what the client may assume, whatever word you used. A detailed figure, broken down by line and sent after a long scoping conversation, reads as a quote whatever the heading says. If you mean it to be movable, the document has to say what would move it.

Say you give a figure quickly and informally, meant as a ballpark, and the client treats it as the price. The work then turns out to be larger. Instead of discussing the extra work, you're discussing whether you're going back on your word. Adding two sentences of assumptions at the start would have avoided that conversation, and I'd add them to any figure you send before the scope is settled.

Turning one into the next

An accepted quote doesn't turn into an invoice. When the work is done, you raise a separate document with its own number and date for the amount agreed. I recommend keeping the quote, because it's the record of what was agreed and you'll need it if the invoice is ever queried.

If the quote covered several stages, each stage gets its own invoice as it completes, rather than one at the end. Deposits and progress billing covers how to split it. To work out the figures for a job with several rates or a deposit already taken, the invoice calculator does the arithmetic and hands it to the editor.