Use an estimate to describe proposed work and its expected cost before the work is agreed or completed. Use an invoice to request payment for work, goods or expenses being billed. The exact document names and legal effect can vary by business practice and jurisdiction, so describe the scope, amount and terms clearly instead of relying on the label alone.
A practical order for service work
- Define the proposed work. List the scope, quantities or deliverables, assumptions, exclusions, estimated amount and how long the proposal is valid if that is relevant.
- Confirm changes before proceeding. If scope, schedule or costs change, document the revised understanding with the customer before treating the earlier estimate as current.
- Bill for the agreed work. An invoice can identify the work or items billed, the amount due, payment instructions and due date according to the terms you and the customer agreed.
This sequence is a workflow suggestion, not a universal contract or accounting rule. Local requirements, tax treatment, deposit rules and industry practices may differ. Use professional advice where the document has legal or tax consequences.
Keep the documents connected
Use consistent customer, project and line-item details so the invoice can be compared with the original scope. If you bill only part of a project, make the billed portion and remaining work understandable. Do not imply that a projected estimate is a final charge or that an invoice is proof of payment unless it has been paid and recorded as such.
The Estimate Generator helps prepare a proposed-work document. When it is time to bill, create the invoice with the Invoice Generator. For pricing inputs, the Job Costing Calculator can model costs you enter; the profit margin vs. markup guide explains how those percentages differ.
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