The process of invoicing: from initial quotes, to invoices, and payment receipts

Sending an invoice to a customer is often just one part of documenting a sale. It shouldn’t be considered as an isolated event, but rather as part of a larger interaction with a customer or client. At times, the sales process requires you to issue several different documents, which each perform distinct functions. 

This article explains the sales process and the different documents that are needed, all the way from an initial quote, to a proforma invoice, a finalised invoice, and finally, a delivery note and payment receipt. 

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Stage 1: Working out the details of the sale

It’s natural for customers to make inquiries before committing to a purchase. If you’re selling certain products, it can sometimes be as easy as confirming how much they cost. However, some businesses provide services that can’t have an upfront price as the costs involved will vary.  

Therefore, you may need to offer a prospective buyer an overview of the costs involved to help them decide whether they want to do business with your company. You can provide your customer with an estimate or a quote.

Give a prospective customer an estimate 

Estimates are essentially educated guesses. You may know some of the details about the job, but you haven’t yet been able to price everything up. An estimate may be given when a customer calls to make an inquiry into your business’s services, or when you first visit a site. It’s only a first opinion.

Provide a quotation for the customer

A quotation is the first official document you’ll send to your customer. It’s given to a customer after they've expressed interest in purchasing your products or services. The quotation is used to tell them the price before they commit to the sale. 

When you issue a quotation, you’ll include most of the information you would expect to see on an invoice. You need to provide a breakdown of the price, your business and customer's contact details, and any discounts you can apply. Importantly, you must also indicate how long the quote is valid for. 

Be as thorough as possible when giving your quote, as this increases the likelihood it will be accepted by your customer. After all, people are more likely to agree to something when they know exactly what it is.

Importantly, quotations are not legal documents. They have no legal status and payments can’t be made on them. However, as a quote provides the customer with an exact price for a job, a quote should be the final price, and shouldn’t be changed once it’s been accepted. The only exception to this would be if the job itself is changed, for example, if a customer wants additional work or different materials.  

Stage 2: Finalising the sale with an invoice

Once a customer has confirmed that they’ll purchase a product or service, it’s time to issue an invoice. This is either a proforma invoice or a finalised invoice.  

Issue a proforma invoice

A proforma invoice is issued if the final details of the sale are yet to be confirmed. Whilst this may be hard to distinguish from a quote, it’s fundamentally different. When you issue a proforma invoice, the customer has already confirmed they will make the purchase; a quote is only an inquiry and payment is not guaranteed. 

An example of when to use a proforma invoice makes it easy to understand. Suppose you own a brewery and a bar orders 50 kegs of your beer. The sale is already agreed upon, but they may need to double-check which types of beer they need. In this case, you can issue a proforma invoice and convert this into an invoice once the order is confirmed.

A proforma invoice looks the same as a standard invoice. However, it doesn’t have an invoice number, and must be titled ’Proforma Invoice’. 

Just like a quote, a proforma invoice doesn’t have legal status. Payments can’t be made on a proforma invoice. Once the sale has been confirmed and the customer is ready to pay the balance due, a finalised invoice must be issued. 

Issue a finalised invoice with the final details

Finalised invoices have legal status and can be used to request payments from customers. Invoices require certain information to be valid and can be distinguished from other documents by their invoice number and the heading, ‘Invoice’. 

The invoice is the most common document used in the sales process. To create a customer invoice, you can either convert a quote or a proforma invoice you’ve already issued, or create a new invoice from scratch. Depending on your type of business, you may or may not have needed to issue your customer with previous documents. 

The invoice will include the terms of payment, the due date, a breakdown of the sale, the total amount due and any VAT. It’ll also include your business’s information and customer’s details.

At this point, the sale is finalised and the invoice can’t be changed. Whereas quotations and proforma invoices can be revised, a mistake on an invoice must be corrected by cancelling the invoice with a credit note.  

Stage 3: Receiving payments and confirming delivery

Issuing an invoice may not be the last stage of your correspondence with your customer. Once payment has been received, providing additional documents may help your customer organise things at their end.

Confirm the customer’s payments with a payment receipt

A customer can be issued with a payment receipt once you receive any form of payment from them. A payment receipt can confirm either the full payment for an invoice or a partial payment, in which case the outstanding balance will be noted. Issuing a receipt will give the customer peace of mind, knowing that they’ve correctly paid the invoice and they don’t owe money. 

The payment receipt should show the invoice number for which the payment is for, the amount that was paid, any remaining balance due and your business details.

Send a delivery note

If you supply products to your customer, it may be necessary to include a delivery note in any shipment.  This document describes which products are included in a specific delivery and can be used by the customer as a checklist to ensure they've received all of their goods. Everything that’s listed on the delivery note should be included in that particular shipment.

Once again, the delivery note should include the details of both the business and the customer. It should also show the date of issue, the date of delivery and a list of the products included in the shipment. As a business, you may also choose to include a breakdown of the price and request a customer’s signature to confirm they received your products.  

Complete the sales process faster with invoicing software

Whilst this may sound like a lot of documents, invoicing software can help you every step of the way and is designed with this process in mind. 

Invoicing software will auto-fill your information

At every stage, your invoicing software will copy the information from one document to the next, ensuring that the details remain the same and helping to minimise the risk of mistakes. 

If you create a quote using your invoicing software, it should be possible to automatically convert this document into an invoice. You can then decide whether you'd like to send a proforma invoice or a finalised invoice to your customer. 

Of course, you can still manually edit this information if necessary, and the software will accommodate your changes. For example, as explained, you may need to revise details of the proforma invoice before converting it into a finalised invoice. 

Invoicing software provides online templates

The blank online templates invoicing software provides for each document are equally useful. By using invoicing software, you’ll never forget what information needs to be on each document. For example, when you create a finalised invoice with SumUp Invoices, all you need to do is fill in the empty invoice template you’re given, and you know your invoice is compliant.

Moreover, using the online templates will ensure your documents are formatted consistently. Your software will generate designs that automatically use the same font, colour scheme and format, taking your correspondence with your customers to the next level.

Create free invoices with SumUp Invoices