Key takeaways
- Quotation comes before the work; invoice comes after delivery or performance.
- A quotation carries a validity date; an invoice carries a due date.
- Only the invoice is an accounting and tax document that goes into your books.
- A proforma invoice sits between the two: it looks like an invoice but requests nothing yet.
- Keep separate numbering series for quotations and invoices.
Side by side
| Aspect | Quotation | Invoice |
|---|---|---|
| Purpose | Offer a price for proposed work or goods | Request payment for work done or goods supplied |
| Timing | Before acceptance | After delivery or performance, or per an agreed schedule |
| Key date | Valid until | Issue date and payment due date |
| Legal effect | An offer, capable of being accepted or expiring | A demand for payment and a record of a supply |
| Accounting | Not recorded as revenue | Recorded as revenue or a receivable |
| Tax | Shows tax as an estimate | The tax document a buyer relies on to recover input VAT |
| Numbering | Own quotation series | Own sequential, gapless invoice series |
| Changes | Revise and reissue freely | Correct by credit note, never by silent edit |
What a quotation must make clear
- That it is a quotation, not a bill — say so in the title and near the total.
- A validity period, so pricing cannot be relied on months later.
- The exact scope quoted, and an exclusions line for what is not included.
- Whether tax is included or added, and at what rate.
- Lead time, payment terms on acceptance and how the customer accepts.
Once accepted, a quotation usually becomes part of the contract. That is why scope and exclusions matter as much here as they do in the agreement that follows.
What an invoice must contain
An invoice is a tax and accounting record, so its content is partly prescribed rather than a matter of style. In the GCC that generally means the supplier's legal name, address and tax registration number, the customer's details, a unique sequential number, the issue date and date of supply, a clear description, the taxable amount, tax rate and tax amount, and the total payable.
- Number invoices sequentially with no gaps, in a series separate from quotations.
- State the payment due date and the accepted payment channels.
- Where a currency other than the local one is used, show the tax amount in the local currency if that is required.
- Never edit an issued invoice: cancel or adjust it with a credit note so the audit trail stays intact.
VAT invoicing content and thresholds are set by each authority — the UAE FTA and Saudi Arabia's ZATCA differ in detail, including e-invoicing requirements. Check the current rules for the country you invoice from.
Where the proforma invoice fits
A proforma invoice is issued when the buyer needs an invoice-shaped document before a tax invoice can properly be raised: to open a letter of credit, arrange an advance payment, raise a purchase order or support customs pre-clearance. It states amounts like an invoice but is explicitly not a demand for payment and is not recorded as revenue.
- Quotation — price offered, with a validity date.
- Acceptance or purchase order — the buyer commits.
- Proforma invoice — where an advance, credit line or customs document is needed.
- Delivery note — proof that goods arrived and were accepted.
- Tax invoice — the payment demand and accounting record.
- Receipt — confirmation of payment received.
- Credit note — correction or return, if required.
Common mistakes
- Sending a quotation with an invoice number, which makes customers query the bill and confuses your ledger.
- Converting a quotation into an invoice without re-checking quantities actually delivered.
- Issuing a proforma and then never issuing the tax invoice after payment.
- Reusing or skipping invoice numbers, which is the single fastest way to fail an audit check.
- Adjusting an invoice by editing the PDF rather than issuing a credit note.
Frequently asked questions
Can a quotation be used as an invoice?
No. A quotation is an offer, not a tax document, and it lacks the sequential number, supply date and tax detail an invoice needs. Convert it into an invoice after delivery, keeping separate numbering for each.
Is a quotation legally binding?
The price is usually binding for the stated validity period once the customer accepts it. That is why every quotation should carry a validity date and a clear exclusions line.
What is the difference between a proforma invoice and an invoice?
A proforma invoice previews the amounts before a supply is complete and is not an accounting or tax document. A tax invoice records an actual supply, enters your books and is what the buyer uses to reclaim input VAT.
When should I issue the invoice?
After the goods are delivered or the service performed, or at the milestones agreed in the contract. VAT rules also tie invoicing deadlines to the date of supply, so do not delay indefinitely.
Do I need to show VAT on a quotation?
Show tax as an estimate and say clearly whether the quoted figures include or exclude it. Only the invoice functions as the tax document the buyer relies on.
How do I correct an invoice I already sent?
Issue a credit note referencing the original invoice number, then a corrected invoice if needed. Editing or re-sending the original destroys the sequence and the audit trail.
Should quotations and invoices share a numbering series?
No. Keep two series, for example QUO-2026-014 and INV-2026-014, so the accounting sequence stays clean and gapless.