Quotation vs Estimate vs Proforma: What to Send When

A quotation is a fixed price offer, an estimate is an informed guess that may change, and a proforma invoice is a preview of the invoice you will raise once the client confirms. Send an estimate when scope is still fuzzy, a quotation when you can commit to a price, and a proforma when the client needs an invoice-like document before paying an advance or getting approval. None of the three is a tax invoice, and none goes on your EDF.

Key takeaways

• Estimate: approximate cost, clearly flagged as subject to change. Good for early conversations.
• Quotation: a firm price for defined scope, usually valid for a stated period. Once accepted, it shapes the contract.
• Proforma invoice: looks like an invoice but is not one; used for approvals, advances and client-side budgeting.
• Only the final tax or export invoice records the sale for GST and goes on the EDF.
• Use a consistent reference number so the estimate, quotation, proforma and invoice can be traced together.

The three documents side by side

The table simplifies. Whether a quotation is legally binding depends on its wording and how the client accepts it, and that is a contract law question. This article is general information, not legal or tax advice.

When to send an estimate

Use an estimate when you cannot yet promise a price. A website redesign where the client has not decided how many pages they need, or a data-migration project where nobody has seen the legacy system, are classic cases.

Make it clearly an estimate:

• Title it "Estimate", not "Quote".
• Give a range or a figure with assumptions ("Based on 12 templates and up to 40 hours of content migration").
• State what would change the price.
• Add a short validity period.

Example. Inkwell Web Studio, a Jaipur proprietorship, gets an enquiry from a café chain in Melbourne. Scope is unclear, so Inkwell sends an estimate of AUD 6,500 to AUD 8,000, listing the assumptions. Three calls later, scope is fixed.

When to send a quotation

Send a quotation once scope is defined and you are prepared to stand by the price. A good quotation includes:

• a quotation number and date;
• your details and the client's;
• a scope description specific enough to prevent arguments later;
• price, currency and any taxes (for export of services under LUT, no IGST);
• payment terms, such as 30% advance and the balance on delivery;
• validity ("Valid for 30 days from the date above");
• any exclusions.

Continuing the example, Inkwell sends Quotation Q-2026-044 for AUD 7,200, valid for 21 days, with 40% advance. Our free quotation maker produces this layout, and our quotation format guide walks through each field.

When to send a proforma invoice

A proforma invoice is useful when the client needs something that looks like an invoice before the real one exists. Common reasons:

• The client's finance team needs it to approve an advance payment.
• The client needs it for internal budgeting or a purchase order.
• You want an advance before starting work, but your final invoice will be raised on delivery.

Mark it clearly "Proforma Invoice" and avoid using your tax invoice number series. It should mirror the deal, with the amount, currency, payment terms and bank details, but it does not record a supply for GST.

Inkwell's client accepts the quotation. Its accounts team asks for a proforma for the 40% advance, AUD 2,880, so Inkwell sends Proforma PI-2026-019 with its international bank details. You can create one with our free proforma invoice generator.

Where the export invoice and EDF come in

Only the final invoice counts for GST and FEMA. For a service exporter, that means:

1. Tax or export invoice. Raised when GST rules require it, carrying your GSTIN, SAC code and, if under LUT, "Supply meant for export under LUT without payment of IGST".
2. EDF. Each export invoice goes on the EDF for the month in which it is dated, due within 30 days from the end of that month. Estimates, quotations and proformas never appear on the EDF.
3. Realisation. The invoice must be paid in full within 9 months of its date.

Advances deserve a note. If the client pays the advance against a proforma before you raise an invoice, GST and FEMA treatment of advances needs care. Ask your CA when the invoice should be raised, and how your bank treats an advance received before an invoice exists.

Keep the paper trail linked

Use one reference that travels with the deal:

When the bank later matches payments to invoices, or a client disputes scope, you can trace everything in a minute.

Frequently asked questions

What is the difference between a quotation and an estimate?

An estimate is an approximate cost that may change as scope becomes clear. A quotation is a firm price for defined scope, valid for a stated period, which normally becomes part of the agreement once the client accepts it.

Is a proforma invoice the same as a tax invoice?

No. A proforma invoice previews the final invoice and is often used to get approval or an advance. It does not record a supply for GST; the tax or export invoice does that.

Do I declare a proforma invoice on the EDF?

No. Only actual export invoices go on the EDF, in the month they are dated. Quotations, estimates and proformas are pre-sale documents.

Can I ask for an advance against a proforma invoice?

Yes, this is a common use. Ask your CA how GST applies to advances for your services, and when to raise the actual invoice, so your EDF and GST records stay consistent.

Bottom line

Estimate when unsure, quote when confident and send a proforma when the client needs an invoice-shaped document before paying. Keep one reference running through all of them. Start with our free quotation maker and move to a proper invoice when the work is confirmed.