Estimate, quote, invoice, and receipt
Five documents get mixed up constantly. Here is what each one commits you to, and what goes wrong when you send the wrong one.
By Tiny Utility Lab, the team behind FreeInvoicePDF. Updated .
Five documents circulate around a single piece of paid work, and in casual conversation people use the names interchangeably. The documents are not interchangeable. One of them is a guess, one of them can bind you to a price, one of them asks for money, and one of them proves money arrived. Sending the wrong one is how a job ends up either unpaid or delivered at a loss.
The short version
| Document | When | What it does |
|---|---|---|
| Estimate | Before the work | Approximate price, expected to move |
| Quote | Before the work | Fixed price for a defined scope |
| Purchase order | Before the work | The client’s instruction to proceed |
| Invoice | After delivery, or per schedule | Request for payment of a specific amount |
| Receipt | After payment | Proof the money was received |
Estimate
An estimate is your best assessment of what a job will cost before anyone knows exactly what the job involves. It is the right document when the scope is genuinely open: a renovation where nobody has opened the wall yet, a support arrangement where the hours depend on what breaks, a design project that will be scoped properly after a discovery session.
Because an estimate is a prediction, it has to say so on its face. Three things make one useful rather than misleading:
- The word estimate, prominently. Not in the small print. If the reader cannot tell at a glance that this is not a fixed price, you have created an expectation you may not be able to meet.
- The assumptions it rests on. “Assumes existing wiring is serviceable” or “assumes two rounds of revisions”. Assumptions are the mechanism by which you can revise the number later without appearing to move the goalposts.
- An expiry and a variation rule. Material prices and your availability both change. A line such as “valid for 30 days; variations quoted separately before work proceeds” costs nothing to include and settles most later arguments.
Time and materials estimates deserve a specific caution. Showing an hourly rate and an expected number of hours is honest, but clients remember the total and forget the word estimate. If there is a number the client must not be surprised by, put a not-to-exceed figure on the document and treat anything above it as requiring approval.
Quote
A quote is a fixed price for a defined scope. Once the client accepts it, that is the price, and if the work takes twice as long as you expected the difference is yours to absorb. That is the whole trade: the client buys certainty and you take the delivery risk in exchange for being easier to say yes to.
Which means the scope statement is doing more work than the price. A quote should say what is included, and, more importantly, what is not. Named deliverables, named number of revisions, named exclusions. A quote also needs a validity period, because accepting a three month old price is not reasonable.
In some jurisdictions an accepted quote is a contract, so treat one as something you would be comfortable being held to. If you are not comfortable being held to it, you wanted an estimate.
Proposal, tender, bid
These are quotes with extra clothing. A proposal wraps the price in an argument about approach, team, and timeline. A tender or bid is a quote submitted into a formal procurement process, usually against a specification you did not write. The commercial mechanics are the same: a defined scope at a stated price for a stated period.
Purchase order
A purchase order goes the other direction. Your client’s finance system issues it to authorise a specific spend with you, and it usually arrives after they accept your quote. It carries a PO number that you must then put on your invoice.
This is the single most common cause of a mysteriously unpaid invoice at a larger company. If the PO number is missing, the invoice cannot be matched to an authorised commitment, and it sits in a queue while nobody tells you why. Ask whether the client uses purchase orders before you invoice, not after.
Invoice
An invoice is a request for payment of a specific amount for work already delivered, or for a stage that the agreement says is now payable. It is the only document in this list that is normally a formal accounting record on both sides, which is why it needs the unique reference, the dates, and the tax treatment set out in how to write an invoice.
An invoice is not the place to introduce anything new. Price, scope, and payment terms should all already be familiar to the reader from the quote. If your invoice contains a surprise, expect a delay.
Proforma invoice
A proforma invoice looks like an invoice but is issued before the obligation exists, typically to request payment in advance or to support a customs declaration. It is generally not a tax document and should not be entered into your sales records as one. Label it clearly as proforma, and issue a real invoice when the work is done or the payment is taken. If you are simply asking for money up front on a normal job, a deposit invoice is usually the cleaner instrument, and payment terms explained shows how to net the deposit off the final invoice.
Receipt
A receipt confirms that a specific payment was received. It is not the same as an invoice marked paid, though in practice many small suppliers send exactly that and everyone is content. Clients need receipts for expense claims, so if one is asked for, send it promptly and reference the invoice number it settles. To send the invoice marked paid, use the paid invoice template.
Where the confusion actually costs money
- Calling a quote an invoice. Send a document headed Invoice before the work is agreed and a diligent accounts team may book it as payable, or bounce it as unauthorised. Either way you have created a record you did not intend.
- Calling an estimate a quote. The word implies you have fixed the price. If costs run over, the client is entitled to be annoyed, and you may have little to point at.
- Invoicing without referencing the agreement. The invoice should name the quote or PO it comes from. Without that thread, the approver has no way to confirm the amount was authorised.
- Never converting the estimate. An estimate does not become payable by being accepted. Work finishes, and then an invoice has to be raised. Small suppliers lose real money by assuming the earlier document already asked for payment.
Turning your estimate into an invoice
FreeInvoicePDF has a contractor estimate generator alongside the invoice generator. Both run in the browser, and deliberately do not talk to each other: there is no server holding your documents, so there is no automatic convert-to-invoice button. To bill an accepted estimate, open the invoice generator and re-enter the agreed lines.
That manual step is not purely a limitation. An estimate and the invoice that follows it are rarely identical, because scope moved, hours differed, or a variation was approved. Retyping the lines is the moment you notice. What you should carry across is the reference: putting “Per estimate EST-118 dated 2 September 2026” in the notes lets the client match the two documents without asking you to explain the difference.