What is the difference between an invoice, a proforma invoice and a quotation?
A quotation is an offer with prices before the client agrees. A proforma invoice is a preliminary bill sent before supply, often to collect an advance; it is not a tax invoice. A tax invoice is the final bill issued for the supply, which counts for GST and your accounts. PalmGro Flow creates proposals, quotations and invoices as PDFs.
Quotation (or estimate)
- Sent before the deal is agreed.
- Shows items, prices, taxes and validity date.
- No legal or tax effect until accepted.
- In service businesses, a proposal often includes the quotation. See how to write a proposal.
Proforma invoice
- Sent after the client agrees but before the supply or before payment.
- Used to request an advance, or for the client's internal approval or bank process.
- Looks like an invoice but is clearly marked "Proforma".
- Not a tax invoice; it does not create a GST liability by itself and is not entered as a sale.
Tax invoice
- The final bill for goods or services supplied.
- Must follow GST rules if you are registered. See GST invoice basics.
- Counts as a sale in your books and in GST returns.
- Has a unique, consecutive number.
Which one to use when
- Client asks for price → quotation.
- Client agrees, you need an advance → proforma invoice.
- Work delivered or billing period starts → tax invoice.
- Payment received → receipt (optional) and record the payment against the invoice.
How PalmGro Flow helps
PalmGro Flow builds proposals and quotations from your saved plans, creates invoices with your GST details and client information, and records payments against them. Everything stays linked to the client, so you can see the journey from quote to paid invoice.
This guide is general information. Confirm GST treatment of advances and invoices with your CA.
Questions people ask
Is a proforma invoice legally binding?
It is a commercial document showing agreed terms, but it is not a tax invoice. Treat it as a formal request for payment.
Do I need to charge GST on a quotation?
Show the GST that will apply, but no GST is due on a quotation itself.
Can a quotation become an invoice?
Yes. Once accepted and supplied, convert the quoted items into a tax invoice with a new invoice number.
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