Quote vs Invoice vs Estimate: What's the Difference?

Estimate, Quote, and Invoice Defined

What is an estimate?

An estimate is an educated guess at what a job will cost before the full scope is nailed down. It gives the customer a rough figure so they can decide whether to keep talking. An estimate isn't legally binding and can be adjusted up or down as the scope changes, as GoCardless explains in its quote-versus-estimate guide. A plumber who hasn't opened the wall yet, or an agency scoping a vague brief, will lead with an estimate because the real number depends on what they find.

What is a quote?

A quote (or quotation) is the exact, fixed price for a clearly defined job, sent before work begins and held for a stated period. It spells out the full cost, timeline, and scope, and once both sides agree, the price can't change without a new agreement. Where an estimate says 'roughly this much,' a quote says 'this much, full stop, if you accept by the date shown.' That precision is the whole point. It lets the customer commit with confidence and protects you from haggling later.

What is an invoice?

An invoice is the request for payment you send after delivering the goods or service. Per Wikipedia's definition, an invoice 'is a commercial document that includes an itemized list of goods or services furnished by a seller to a buyer relating to a sale transaction,' and the words bill, tab, and bill of costs are listed as synonyms. The invoice records exactly what was provided, the final amount owed, and how and when to pay. It's the document that gets you paid and the record your bookkeeping is built on.

The Order: Estimate, Then Quote, Then Invoice

These three documents are stages in a sequence, not swappable options. The path from first conversation to cash in the bank usually runs in this order:

1. Estimate (flexible). You give a ballpark so the customer knows the rough cost. Numbers can still move as the scope firms up.
2. Quote (locks the price). Once the scope is clear, you replace the estimate with a fixed quote, valid for a set window. Acceptance turns it into a deal.
3. Work happens. You deliver the goods or service against the agreed scope.
4. Invoice (requests payment). After delivery, you send the invoice for the final amount, with payment terms such as net 30.
5. Receipt (confirms payment). When the customer pays, a receipt confirms the money came in and closes out the transaction.

Not every job uses all three. A simple, well-understood service might skip the estimate and go straight to a quote. A tiny one-off sale might go straight to an invoice. But when a job is uncertain at the start and concrete by the end, the estimate-then-quote-then-invoice flow is the natural shape of the sale. Keeping each stage in one connected system, instead of scattered across email and spreadsheets, makes it much easier to see which jobs are still quotes and which have turned into unpaid invoices.

This sequence is the heart of what accountants call quote-to-cash. The due date on that final invoice, set by payment terms like net 30, decides how long you wait to be paid. The gap between sending an invoice and getting paid is exactly what makes cash flow tight for a small business.

What Each Document Should Contain

Each document carries different information because each does a different job. Here's what belongs on each one.

Estimate fields

• Your business name and contact details, and the customer's
• A description of the work as you understand it now
• An approximate price or price range, clearly labelled as an estimate
• Any assumptions the number depends on (for example, 'assumes no hidden damage')
• A note that the figure may change as scope is confirmed

Quote fields

• Your details and the customer's details
• A defined scope of work, itemized where it helps
• The exact, fixed total price (with any tax shown)
• A validity period or expiration date, after which the price may change
• Terms and conditions, including what counts as a change of scope

Invoice fields

An invoice is the most structured of the three because it's a financial record. A standard invoice, as laid out in Wikipedia's invoice article, includes the following:

• A unique invoice number for tracking and reference
• The issue date and the payment due date
• Seller and buyer contact details
• Itemized line items: description, quantity, and unit price for each
• The subtotal, then any taxes (such as VAT or GST), discounts, or shipping
• The total amount due
• Payment terms and accepted payment methods

Laying these fields out the same way every time keeps your invoices clean, numbered, and easy to match against the quote they came from.

Is a Quote Legally Binding?

This is where a lot of online advice overstates things. The accurate answer: a quote isn't binding the moment you send it. A quote is an offer, and an offer only becomes a binding contract when the other side accepts it. As Sprintlaw explains, forming a contract generally needs four ingredients: a clear offer, an unqualified acceptance, consideration (something of value exchanged), and an intention to create legal relations.

So 'quotes are always legally binding' is the line to avoid. A quote sitting unaccepted in someone's inbox is just an offer. Once the customer accepts it as written, the fixed price is locked and you generally can't change it without a fresh agreement. If the customer changes the terms when they reply, that's a counter-offer, not acceptance, and the original quote is back on the table.

An estimate, by contrast, is never legally binding. That's the practical difference that matters when scope creeps: an estimate can move with the work, but an accepted quote holds you to the number. This is exactly why you put a validity window on a quote, often a customary 14 to 30 days (though that's convention, not law), so a price you offered months ago doesn't bind you forever.

Handling scope changes

When a job grows beyond what an estimate or quote assumed, don't just absorb it. For an estimate, update the figure and tell the customer before the cost climbs. For an accepted quote, send a written change order or a new quote covering the added scope, so the new price is agreed the same way the first one was. Clear scope boundaries on the original document make these conversations much shorter.

Invoice vs Receipt, Purchase Order, and Pro Forma

Invoices get confused with a few lookalike documents. Telling them apart mostly comes down to who issues the document and when in the cycle it shows up.

The invoice-versus-receipt distinction trips people up most. An invoice precedes and requests payment; a receipt follows and confirms it. A pro forma invoice is a preliminary document that states the seller's commitment to provide specified goods at a stated price, but as Wikipedia notes, it 'is not an actual invoice' and not a demand for payment. It's often used so a buyer can arrange financing or customs paperwork. A purchase order runs the other way: the buyer issues it. And a bill is just an informal word for an invoice.

A 5,000-year-old document

Invoices aren't a modern accounting invention. According to Wikipedia, around 5,000 years ago merchants in Mesopotamia used cuneiform script on clay tablets to document trade transactions, including quantities, prices, and the parties involved: recognizably an invoice. The word itself is younger. Etymonline dates the noun to the 1550s, from a re-Latinized form of French 'envois,' the plural of 'envoi' (a dispatch of goods, literally 'a sending'), from 'envoyer,' to send. The verb 'to invoice' follows in the 1690s.

Why invoices matter for your business

Beyond getting you paid on time, invoices are the backbone of your financial records. They document what was sold, to whom, and for how much, which is what your bookkeeping, tax filings, and any audit rely on. Clean, numbered, consistent invoices keep cash flowing and keep your books defensible. Connecting your quotes, invoices, and customer records in one place, for example with WeldSuite's CRM and WeldBooks, means a won quote can roll straight into an invoice without re-keying anything.