The quote to invoice process, with three finished examples

The quote to invoice process moves one price through up to three documents: a quote before the work, a proforma invoice when the buyer needs to arrange payment first, and a tax invoice after the sale. At each step the date changes job: a validity date runs on the quote and the proforma, and a due date only appears on the invoice.

Put the three finished documents side by side and the headings are the least useful thing on them. The quotation runs three pages, the proforma three, the tax invoice two, and the dates, not the headings, are what separate them.

Everything else follows from that. One document is offering something that can expire. The other is asking for money that is already owed.

This is general information, not legal advice, and not tax advice. Contract law and tax law differs by jurisdiction and changes over time, and the examples here are Australian. Check the current rules that apply where you are, or ask an accountant.

The sequence: quote, proforma, invoice

The three sit at different points in one transaction.

A quote goes out before there is a deal. It prices work that has not started, it has a shelf life, and it usually carries exclusions, because the price only holds if the assumptions do.

A proforma invoice goes out after there is an agreement in principle but before there is a delivery. Its job is to let the other side act: open a letter of credit, lodge an advance customs entry, get an internal approval, release a deposit. It looks like an invoice on purpose, so a bank or a customs broker can read it.

A tax invoice goes out when the sale has happened. It is the document that creates a debt and, in a GST system, the one the buyer needs to claim an input tax credit.

Not every transaction uses all three. Plenty of businesses only ever send the first and the last.

What each one is for

The quotation example is a bathroom renovation priced by trade: eight lines from demolition to making good, a provisional sum for tiles, a four week programme and a three stage payment schedule. Almost half of it is not price at all, it is inclusions, exclusions and terms, because a builder’s quote is mostly a description of what the number does and does not cover.

The proforma invoice example is a container of rattan furniture quoted from Melbourne to Singapore. It carries tariff codes per line, Incoterms, ports, an estimated sailing, weights and the list of documents that will travel with the goods. It exists because a buyer cannot open a letter of credit against a friendly email.

The tax invoice example is the shortest of the three at two pages, and that is the point. Both ABNs, a purchase order reference, six service lines, GST separated out, bank details and a due date. Nothing an accounts payable clerk has to hunt for.

What each document actually carries

The table above counts the fields across all three. Three patterns are worth pulling out.

Validity against due date. Both the quote and the proforma stop being good at a date. Only the invoice has a date by which money must move. Putting a due date on a quote is a common and slightly aggressive mistake.

The GST line. The quotation and the tax invoice both show a subtotal, GST at 10 per cent and a total. The proforma shows none, because it is an export quotation priced in US dollars, and it says in a box that no input tax credit arises from it.

The signature. The quote and the proforma end with signature blocks. The invoice does not, and should not. An invoice is a statement of an amount owed, not something the customer agrees to.

Tax invoice rules in Australia

Of the three documents, only the tax invoice has content set by law, under the A New Tax System (Goods and Services Tax) Act 1999. The full list of what it must show, and the thresholds for when one must be issued, are in how to write an invoice.

The tax invoice example meets those rules: both ABNs printed, the words at the top, GST as its own row in the totals block, and the buyer identified by name, address and ABN because the sale is well over the $1,000 at which the buyer must be identified.

On the quote side, ACCC guidance on price displays says a business must display the total price of a product or service as a single figure, including taxes and unavoidable fees, and that where a partial price is shown the total has to be at least as prominent. The quotation example follows the same habit, ending on one GST inclusive figure rather than a subtotal the customer has to finish themselves.

Numbering and validity

Give each of the three its own series. The examples use QTE, PI and INV prefixes with a year and a sequence, which sounds fussy until somebody asks which quote turned into which invoice eighteen months later.

Validity is the other discipline. The quotation is valid for 30 days from issue; the proforma has a fixed valid until date, which matters because the price behind it depends on freight and materials that move. A quote with no expiry is a standing offer against costs you no longer control.

Note that the quotation example flags its own limit: it carries a warning to check your state’s deposit rules before copying its 10 per cent deposit, because domestic building work is regulated separately in Australia. That is exactly the right instinct for any template, including this one.

When a proforma is the wrong tool

A proforma earns its place when the buyer needs a formal document to act on before delivery. Customs, letters of credit, prepayment approvals, grant acquittals.

It is the wrong tool when you simply want to be paid. Sending a proforma to a domestic customer who is ready to pay creates work: their system may not accept a document that is not a tax invoice, and you will have to issue the real one anyway. It is also the wrong tool for a scope conversation, where a quote with exclusions does far more.

Documents built here never carry fillable boxes, so a quote is settled content rather than a form the customer edits. When you need agreement rather than a value typed in, the signature block is the mechanism, and each party in it becomes one recipient with a name, an email and a place in the signing order.

The three examples

Read the quotation, then the proforma, then the tax invoice, and the field table stops being abstract. For the short definitions rather than the field rules, see the quote, invoice and proforma question page, and for the terms that end up on the back of a quote, the sibling post on common contract clauses.