Quotation vs proforma invoice
Both documents state a price before anything is delivered, and neither demands payment. The difference is where in the conversation they sit.
A quotation asks the customer to decide. A proforma invoice comes after they have decided and helps them pay.
The short answer
Quotation — issued before agreement. It is an offer: here is what it would cost, valid until this date. Its purpose is to win the work.
Proforma invoice — issued after agreement, before delivery. It confirms exact figures including shipping and duties so the buyer can release funds, open a letter of credit or apply for an import permit.
Side by side
| Quotation | Proforma invoice | |
|---|---|---|
| Stage | Before the decision | After the decision |
| Purpose | Win the work | Enable payment or permits |
| Demands payment | No | No |
| Tax document | No | No |
| Includes freight and duties | Sometimes | Usually, itemised |
| Customer may show it to | Their manager | Their bank or customs broker |
| Expires | Yes | Yes |
| Numbering | QT sequence | PRO sequence |
How they sit in one transaction
- Customer enquires. You issue a quotation — scope, price, validity, exclusions.
- Customer accepts.
- Where advance payment, import permits or a letter of credit are involved, you issue a proforma invoice with final figures including freight and estimated duties.
- Customer arranges payment or approval using it.
- Goods ship or work is delivered.
- You issue the commercial invoice — the actual demand for payment and the tax document.
Domestic service work often skips step 3 entirely; export sales rarely can.
Getting it wrong
- Sending a proforma when the customer is still deciding. It reads as presumptuous and omits the persuasive content — scope, options, exclusions — that a quotation carries.
- Sending a quotation when the customer needs to pay. Banks and customs brokers generally will not act on one, so the transaction stalls.
- Treating either as a tax invoice. Neither is. The commercial invoice must still follow.
- Sharing one numbering sequence. Keep QT and PRO series separate, and both separate from invoices.
Which do you actually need?
Two questions settle it. Has the customer agreed? If no, quotation. Do they need a formal document to release money or obtain approval? If yes, proforma.
For most domestic service businesses the answer is a quotation followed by an invoice, and a proforma never appears. For anyone exporting goods or taking payment in advance, the proforma is the document that makes the transaction possible.
Frequently asked questions
What is the difference between a quotation and a proforma invoice?
A quotation is issued before agreement as an offer, to win the work. A proforma invoice is issued after agreement but before delivery, so the buyer can release payment or obtain permits.
Can a proforma invoice replace a quotation?
Not usefully. A proforma omits the persuasive content a quotation carries — options, scope detail, exclusions — and sending one while the customer is still deciding reads as presumptuous.
Is either document a tax invoice?
No. Neither is a tax document, and a commercial invoice must still be issued once goods or services are delivered.
Do I need both on the same sale?
On export sales or where advance payment is required, usually yes. On most domestic service work a quotation followed by an invoice is sufficient.
Should they share numbering?
No. Use separate sequences — QT for quotations, PRO for proformas — and keep both separate from your invoice numbering.