Quotes, invoices and receipts look alike — the same parties, the same line items, the same totals — and they are routinely confused. The difference is what each one claims. A quote proposes a price. An invoice demands payment. A receipt confirms payment happened. Send the wrong one and a client may pay too early, not at all, or twice.
This guide defines each document, adds the two relatives that cause the most confusion — the pro forma invoice and the credit note — and shows how to produce all of them from a single layout in Simple Invoice by changing the title and a few fields.
Quote (or estimate)
A quote is an offer: what you propose to deliver, at what price, valid until a stated date. Once the client accepts it, the quote's terms usually become the contract, which is why a good quote includes scope, exclusions, payment terms and a validity period. An estimate is a looser version — an indication of cost that may change — and should say so explicitly.
A quote is not a request for payment and should never carry an invoice number from your invoice sequence. Give quotes their own prefix, Q-0001, and refer to the accepted quote on the eventual invoice.
Pro forma invoice
A pro forma invoice is a preliminary invoice sent before goods ship or work starts. It looks exactly like an invoice, states what will be charged and is often used so the client can raise a purchase order, arrange payment in advance or clear customs. It is not a tax invoice and is not entered into the books as a sale; the real invoice follows once the transaction is confirmed. Because it looks like the real thing, the title must say Pro forma invoice, and it should state that it is not a request for payment or, if a prepayment is expected, say so plainly. The pro forma invoice template is set up this way.
Invoice
The invoice is the formal request for payment and the document both sides record. It carries a unique sequential number, an issue date, a due date, both parties' details, itemised lines, taxes where applicable and payment details. What to include on an invoice lists every element. Once sent, an invoice is not edited — corrections go through a credit note or a replacement invoice.
Where a tax registration applies, the invoice is also the tax document: the one that lets the client reclaim tax paid and that you report on. This is why tax authorities are particular about what appears on it.
Receipt
A receipt confirms that payment has been received. It references the invoice, states the amount, the date and the method, and is issued after the money arrives. For business clients paying by bank transfer, the invoice marked paid plus their bank statement usually serves the purpose and a separate receipt is rarely requested. Consumers paying by cash or card expect one.
A receipt is not an invoice and does not need an invoice number of its own; "Receipt for invoice INV-0042" is the clearest heading. If you do issue receipts regularly, give them their own sequence.
Credit note
A credit note reverses all or part of an invoice: a returned item, a billing error, an agreed discount after the fact. It references the original invoice, shows the amounts being credited (as positive numbers on a document clearly titled Credit note, or as negatives, depending on local convention) and either reduces what the client owes or records a refund. In many jurisdictions this is the required way to correct an issued invoice, rather than editing or deleting it.
The usual sequence
A typical project produces documents in this order. Not every project needs every one.
- Quote — proposes the work and price; the client accepts.
- Pro forma invoice — if the client needs a document to raise a PO or prepay.
- Deposit invoice — a real invoice for the advance, numbered in the sequence.
- Invoice — for the balance on completion, showing the deposit as amount paid.
- Receipt — if the client asks for confirmation after paying.
- Credit note — only if something on an invoice must be reversed.
One template, five documents
Because the documents share a layout, you do not need five templates. In Simple Invoice the document title is a field on the header block and every printed label is editable, so a quote is the invoice layout titled Quote with the details block showing "Valid until" instead of "Due date", and a receipt is the same layout titled Receipt with a note referencing the paid invoice. Save each variant as its own template so the title, labels and visible blocks are one click away.
Two habits keep the documents apart in your records. First, give non-invoices a different prefix in the number field so they never consume an invoice number — see invoice numbering best practices. Second, when a quote or pro forma is accepted, duplicate it rather than editing it: the duplicate takes the next invoice number and today's date, you change the title to Invoice, and the original stays as the record of what was offered.
Quick reference
When in doubt, ask what the document claims.
- Quote — "This is what it would cost." Before agreement. Own numbering.
- Pro forma invoice — "This is what you will be charged." After agreement, before delivery. Not a tax document.
- Invoice — "Please pay this." After delivery or at a milestone. Sequential number; the tax document.
- Receipt — "You paid this." After payment. References the invoice.
- Credit note — "We owe you this back." Corrects or reverses an invoice. References the invoice.
Questions
Is a quote legally binding?
Often, once the client accepts it within the validity period — which is why quotes should state scope, exclusions and how long they are valid. An estimate is typically not binding and should be labelled as an estimate. Rules vary by jurisdiction.
Can a client pay against a pro forma invoice?
They can, and prepayment is one of the reasons pro forma invoices exist. Once payment is received, issue a real invoice with a sequential number and mark the prepayment as amount paid so the books and the tax reporting are correct.
Do I have to give a receipt?
For business clients paying by transfer it is rarely required; the paid invoice is the record. Consumers, and some countries' rules for cash or card payments, expect one. When asked, a short document referencing the invoice, amount, date and method is enough.