Quotes & proposals

Quote vs invoice vs proforma vs estimate: what is the difference?

Zuvo Team2 November 20267 min read

A quote is an offer, an estimate is a guess, a proforma invoice is a preview and an invoice is a request to be paid. They look alike on the page, which is why small businesses mix them up. Use the right one at the right step and you get fewer disputes and faster payment.

On this page: the five documents side by side · quote · estimate · proforma · invoice · the order they come in · VAT · questions

The five documents side by side

What each document is for. "Binding" describes how people normally treat it, not a legal opinion on your contract.
Document	What it is	When you send it	Binding?
Quote	A fixed price for a defined job	Before work starts	Yes, once the client accepts it
Estimate	A best guess at the cost	When the scope is not clear yet	No, it can change
Proforma invoice	A preview of the final invoice	Before work or delivery, to ask for payment first	No, it is not the final bill
Invoice (tax invoice if you are VAT-registered)	A request for payment for work done or goods supplied	After the work, or for a deposit	Yes, it is the record of what is owed
Credit note	A correction that reduces an invoice	When a price, quantity or job changes after invoicing	Yes, it reduces what is owed

Quote: the price you commit to

A quote lists the job, the price, what is included and what is not, and how long the price holds. When the client accepts it, you have a written record of the deal. That is its real value: if a dispute starts later, the first question is what was agreed, and the quote answers it.

List materials and labour on separate lines.
Add a valid-until date, because material prices move.
State the payment terms, including any deposit.
Say what could change the price, such as hidden damage found once a wall is open.

Our guide to writing a quote that gets accepted goes line by line, and can you charge more than your quote? covers what happens when the job grows.

Estimate: when you cannot yet commit

An estimate is honest about uncertainty. Use it when you cannot see the whole job, for example a renovation behind walls or a repair with an unknown cause. Write "estimate" at the top, give a range or a best figure, and list the assumptions. When the scope is clear, turn it into a quote.

The risk with the word is that clients hear a promise. If you want the number to hold, call it a quote. If you cannot hold it, call it an estimate and say why.

Proforma invoice: a preview, not the bill

"Proforma" means "as a matter of form". A proforma invoice looks like an invoice but is sent before the work or delivery. South African businesses use it in three situations:

Payment before supply. A client or a supplier needs a document to pay against before you start, such as a company that pays by EFT only against an invoice.
Deposits. You need part of the money to buy materials.
Imports and exports, where customs and banks ask for one.

Mark it clearly as a proforma so nobody mistakes it for the final bill. It is not a tax invoice and a VAT-registered buyer should not claim input tax on it. When you supply the goods or services, or when the money arrives, issue the proper invoice and show any deposit already paid.

You can do the same job without the word. A deposit invoice is an ordinary invoice for part of the price, and the final invoice then bills the whole job and takes the deposit off. Zuvo works this way: you ask for a percentage on an accepted quote, and the final invoice takes it off, so nothing is billed twice.

Invoice: the request for payment

An invoice records that you did the work or supplied the goods and what is owed. If you are VAT-registered it must be a tax invoice with the details the VAT Act asks for. If you are not, a clear invoice with your details, the client's, the items, the total and how to pay is enough. See how to write an invoice in South Africa and, for VAT vendors, VAT invoice requirements.

The order they come in

Enquiry. You give an estimate if the scope is unclear.
Quote. You commit to a price. The client accepts it in writing.
Deposit, if needed. A deposit invoice or a proforma, for the part you need before you start.
The work. Changes are agreed in writing and added to the price.
Invoice. The final invoice bills the whole job and takes off the deposit.
Payment and follow-up. A polite reminder if it is late.
Credit note, only if something must be corrected after invoicing. See credit notes in South Africa.

What changes for VAT

Quotes and estimates are not tax invoices. Show whether the price includes VAT, so the client is not surprised later.
Only a tax invoice lets a VAT-registered client claim input tax. Check the rules in the VAT invoice requirements guide.
Deposits and VAT. Money received before the work can bring the VAT forward, so ask your accountant how it applies to your business before you rely on a proforma to defer it.
Not VAT-registered? Leave VAT off every document and do not show a VAT number.

Quote, deposit and invoice in one place

Zuvo writes the quote from your description, lets the client accept it online, raises the deposit invoice and the final invoice, and reminds late payers.

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Questions people ask

What is the difference between a quote and an invoice?

A quote says what you will charge for work you have not done yet. An invoice asks for payment for work you have done or goods you have supplied. A quote is an offer the client can accept; an invoice is a request for money. For a VAT-registered business only a document that meets the tax invoice rules counts as a tax invoice.

What is a proforma invoice?

A proforma invoice is a preview of what the final invoice will say, sent before the work or delivery. Businesses use it to ask for payment up front, for a deposit, or to give a client a figure they can use to arrange payment. It is not the final tax invoice. Once you supply the goods or services, issue the proper invoice.

Is a quote the same as an estimate?

In everyday use many people treat them as the same, but the useful distinction is firmness. An estimate is a best guess that can change. A quote is a price you commit to for a defined job, usually for a stated period. Say which one you mean on the document, and say what could change the price.

Can a client claim VAT on a quote or a proforma invoice?

No. A VAT-registered buyer claims input tax on a valid tax invoice. A quote is an offer and a proforma is a preview, so neither is the document to claim on. Issue a tax invoice for the supply.

Do I need to send a quote before an invoice?

The law does not require you to send a quote. For anything more than a small job it protects you and the client: it records what was agreed, in writing, before work starts. An accepted quote also makes the final invoice easy to reconcile.

General guidance, not legal or tax advice. Rules for the VAT treatment of deposits and prepayments depend on your circumstances, so check them with your accountant or SARS. The VAT invoice rules referred to are in section 20 of the Value-Added Tax Act, summarised in our VAT invoice guide.