A Quotation. An Invoice. A Receipt. They all list items and prices. They all have your logo. But they are three fundamentally different stages of the same transaction. Using the wrong one at the wrong time confuses your client, creates legal ambiguity, and makes you look like you don't understand business basics.
The Timeline: Before → During → After
Think of these three documents as stages in a story:
| Document | When | Purpose | Legally Binding? |
|---|---|---|---|
| Quotation | BEFORE the work | Proposes a price for future work | Yes, once accepted by the client |
| Invoice | AFTER the work | Demands payment for completed work | Yes, it's a formal demand |
| Receipt | AFTER payment | Confirms payment was received | Yes, proof of transaction |
The Quotation (The "Menu")
A quotation is your offer. It says: "Here is what I will do, and here is what it will cost." The client reviews it, and if they accept, it becomes a binding agreement on price. You cannot raise the price after acceptance (unlike an estimate, which is an approximation).
Key fields: Validity period (e.g., "This quote is valid for 30 days"), detailed scope description, terms and conditions, signature line for acceptance.
The Invoice (The "Check")
An invoice is your demand for payment. It says: "The work is done. Here is the bill. Pay me by this date." It should reference the original quotation number for traceability.
Key fields: Invoice number, due date, payment instructions, late fee policy, reference to the original quote/PO number.
The Receipt (The "Thank You")
A receipt is confirmation that the money has been received. It says: "We got your payment. The transaction is complete." This is what the client uses for their own accounting and tax deductions.
Key fields: Payment date, payment method (check, wire, cash), amount received, reference to the original invoice number.
The Complete Transaction Flow
- Client asks for pricing → You send a Quotation
- Client accepts the quote → Work begins
- Work is completed → You send an Invoice
- Client pays the invoice → You send a Receipt
Each step creates a paper trail. If there's ever a dispute, you can trace the entire transaction from proposal to payment with clear, timestamped documentation. This is professionalism at its finest.
Frequently Asked Questions
Can an invoice also serve as a receipt?
No. An invoice says "you owe money." A receipt says "money received." They are legally distinct documents. However, you can mark a paid invoice as "PAID" and use it as a receipt in informal situations. For proper bookkeeping, always issue a separate receipt.
Do I always need to send a quote first?
Not for simple, pre-agreed work (like a recurring monthly retainer). But for any project with a defined scope, always send a quote first. It protects you from "I thought it would be cheaper" conversations later.