Invoice vs. Receipt vs. Quote: Which Document Do You Need?
Updated
Most sales go through the same documents in roughly the same order. Picking the right one avoids confusion with clients and keeps your accounting clean.
| Document | Sent by | When | Purpose |
|---|---|---|---|
| Quote / estimate | Seller | Before the work | Proposes a price |
| Purchase order | Buyer | When ordering | Confirms the order and price |
| Proforma invoice | Seller | Before shipping | Preliminary bill for prepayment or customs |
| Invoice | Seller | After delivery | Requests payment |
| Receipt | Seller | After payment | Proves payment was made |
| Credit note | Seller | After an invoice | Reduces or cancels an invoice |
Invoice vs. receipt
An invoice says “please pay this”. A receipt says “you have paid this”. An invoice has a due date and a balance; a receipt has a payment date and method. If a client pays on the spot, you may only need a receipt.
Quote vs. estimate
A quote is a fixed price for a defined scope, and once accepted it is usually binding. An estimate is an approximate price that may change. Use a quote when you know the scope, and an estimate when you don't.
Proforma invoice vs. invoice
A proforma looks like an invoice but is not one. It is not entered in your accounts as a sale and does not create a tax liability. Use it when the buyer needs to pay up front or customs needs a declared value, and issue the real invoice once the sale completes.
Credit note vs. refund
Once an invoice is sent, you shouldn't edit or delete it. If you overcharged, or goods came back, issue a credit note that references the original invoice number. You can then refund the money or deduct it from the next invoice.
Purchase order vs. invoice
The buyer creates the purchase order; the seller creates the invoice. Many companies only pay invoices that quote a matching PO number, so include it if you were given one.