Quote vs Invoice: What's the Difference? (And Why It Matters)

If you're new to running a small business in NZ, you might be confused about quotes and invoices. They look similar, both have dollar amounts, but they serve very different purposes.

Using them correctly can help you win more jobs, get paid faster, and avoid disputes with customers.

What is a Quote?

A quote is an offer to do work for a specific price.

Key features:

• Sent before work starts
• Customer can accept or reject it
• Price is usually fixed (unless scope changes)
• Not a request for payment
• Valid for a limited time (e.g., 30 days)

Why you send quotes:

• Customer wants to know the cost before committing
• Customer is comparing prices from multiple tradies
• Job is complex and needs a detailed breakdown

What is an Invoice?

An invoice is a request for payment for work you've completed (or are about to complete).

Key features:

• Sent after work is done (or when payment is due)
• Customer is legally obligated to pay
• Includes payment terms and due date
• Must be GST-compliant if you're registered

Why you send invoices:

• Work is complete and you want to get paid
• You've delivered products or services
• Payment is now due

Quote vs Invoice: Side-by-Side Comparison

Common Confusion: Estimate vs Quote vs Proposal

Estimate:

• Rough guess of cost
• Can change based on actual work
• Less binding than a quote

• Fixed price offer
• Should honor the price if customer accepts
• More binding

• Detailed plan + quote
• Used for complex projects
• Includes scope of work, timeline, and pricing

When to Send a Quote

You should send a quote when:

1. Customer asks "How much will it cost?"

1. Job is over $500

1. Customer is comparing multiple tradies

1. Work scope might be unclear

Example scenarios:

• Bathroom renovation
• New deck build
• Hot water cylinder replacement
• Electrical rewiring

When to Send an Invoice

You should send an invoice when:

1. Work is complete

1. Deposit is due

1. Progress payment is due

1. Customer wants to proceed without a quote

Example scenarios:

• Finished installing new cylinder → Send invoice
• Customer approved quote, needs to pay deposit → Send invoice for deposit
• Emergency plumbing call-out → Fix issue, send invoice same day

The Professional Workflow: Quote → Approval → Invoice

Here's how most successful tradies work:

Step 1: Customer Inquiry

Step 2: Site Visit & Quote

• You inspect the job
• Send professional quote within 24 hours
• Quote includes detailed breakdown, GST, total

Step 3: Customer Reviews

Step 4: Approval

Step 5: Deposit Invoice (Optional)

• You send invoice for 50% deposit
• Work doesn't start until deposit paid

Step 6: Complete Work

• You do the job
• Customer is happy

Step 7: Final Invoice

• You send invoice for balance (or full amount if no deposit)
• Customer pays
• Job complete!

• Clear expectations from the start
• No price surprises
• Professional process builds trust

Converting a Quote to an Invoice

Best practice: When customer approves your quote, convert it directly to an invoice.

What to keep the same:

• Line items and descriptions
• Prices and quantities
• GST amount
• Total

• Label: "QUOTE" → "INVOICE" (or "TAX INVOICE")
• Add: Invoice number
• Add: Payment terms and due date
• Add: Payment instructions (bank account, etc.)

Quote #123 becomes Invoice #456

• Same line items
• Same total ($2,500)
• Now includes: "Due: 7 days (22 Jan)"

Can You Send an Invoice Without a Quote?

Yes! Quotes aren't always necessary.

When you can skip the quote:

1. Small jobs (under $300)

1. Emergency work

1. Regular customers

1. Hourly rate jobs

Example: Customer calls with leaking tap. You fix it in 30 minutes. Send invoice for $120. No quote needed.

What If the Price Changes After Sending a Quote?

The problem: You quoted $2,000 but actual cost is $2,500.

The rule: You should honor your quote unless scope changed.

Exceptions (when you can increase price):

1. Customer changed the scope

1. Unforeseen issues discovered

1. Supplier price increase (rare)

How to handle it:

"Hi Sarah,
When I opened up the wall, I found the framing is rotted and needs replacing. This wasn't visible during the quote.
Original quote: $2,000
Additional work required: $500
New total: $2,500
Happy to discuss. Let me know how you'd like to proceed.
Cheers,
Mike

Important: Get customer approval before doing extra work.

NZ Legal Requirements: Quotes vs Invoices

Quotes

No legal requirements for what must be on a quote in NZ.

But good practice to include:

• Your business name and contact details
• Customer name
• Description of work
• Price breakdown
• GST (if registered)
• Quote validity period
• Terms and conditions

Invoices

Legal requirements (if GST-registered):

• Must say "Tax Invoice"
• Your GST number
• Customer name and address (if over $1,000)
• Description of goods/services
• Total amount including GST
• GST amount clearly shown

Common Mistakes to Avoid

❌ Mistake 1: Sending an Invoice When You Should Send a Quote

Problem: Customer hasn't agreed to the work yet, but you send an invoice.

Why it's bad: Customer feels pressured or confused. They wanted a price first.

Fix: Always send a quote before starting work (unless it's a small job or emergency).

❌ Mistake 2: Not Converting Quote to Invoice

Problem: Customer approved the quote, but you send a new invoice with different prices.

Why it's bad: Customer sees price mismatch and questions you.

Fix: Convert quote directly to invoice so prices match exactly.

❌ Mistake 3: Forgetting to Add "Tax Invoice" Label

Problem: You're GST-registered but invoice doesn't say "Tax Invoice."

Why it's bad: Customer can't claim GST back. Not IRD-compliant.

Fix: Use "TAX INVOICE" for all invoices if you're GST-registered.

❌ Mistake 4: Quoting Excl. GST to Non-Business Customers

Problem: Quote says "$2,000 + GST" to a homeowner.

Why it's bad: Homeowners expect all-inclusive pricing. They don't care about GST breakdown.

Fix: For homeowners, quote inclusive of GST: "$2,300 (inc. GST)"

For businesses, you can quote excl. GST: "$2,000 + GST = $2,300"

Summary: Quote vs Invoice

Quote:

• ✅ Sent before work
• ✅ Customer can accept or reject
• ✅ Fixed price offer
• ✅ Valid for limited time

• ✅ Sent after work (or when payment due)
• ✅ Customer must pay
• ✅ Legal payment request
• ✅ Must be GST-compliant

Ready to Send Professional Quotes and Invoices?

Paymate makes it easy:

• Create quotes in 2 minutes
• Convert to invoices in 1 click
• Automatically GST-compliant
• Send from your phone or computer

Related Articles:

• How to Write Professional Quotes That Win Jobs
• GST Invoicing Requirements in New Zealand
• How to Get Paid Faster: 10 Tips