Businesses encounter a large amount of documentation and data when beginning any sale or service. Invoices and estimates are two of these critical documents.

While one is created with assumptions, the other is evaluated upon the accomplishment of required sales or services. Though this is only a broad overview of both terms.

To better understand the difference between invoice vs estimate, let us first take a look at the purchasing process.

Understand the Purchase Process

The purchase process for small businesses usually involves the following steps:

  • The purchase process begins when a client in need searches for a service or good required. You can provide a preliminary estimate of the cost, supply time, and other resources from your business once requested.
  • The products or services are provided within a mutually agreed-upon time frame once a reasonable estimate is agreed upon.
  • The client must pay now, but typically they file a purchase order to finalize the requirements and cost of the ordered goods/services. Only once purchase orders have been accepted are commercial invoices generated.
  • To seek payment of the exact amount or cost, your company can now send an invoice to clients. The final bill can be sent once payment has been received.

The Difference Between an Estimate and a Final Invoice

Here is a comparison between invoice & estimate:

Estimate Invoice
An estimate is a detailed document that you send to a client explaining the approximate amount you predict to charge for the goods or services. A potential client decides to accept or reject the estimate. An invoice details the products or services provided to the individual customer or small businesses, the total amount owed, and the desired mode of payment.
Before engaging in contract documents, a business will offer a customer an estimate so that they may have a feel of what they could anticipate owing. A business issues an invoice following the completion of a project, whether it is for the sale of goods or the supply of services.
It is an approximate number for the total cost to be paid and the turnaround time that the parties can expect. It varies to a certain extent. It is a fixed document since it is prepared when the project is completed and takes into account all project data.
After the estimate is delivered, the two parties can still discuss it. A revised estimate is made to change any specifics based on negotiations. It helps in gaining a primary idea about the exact cost that may be paid by the clients to the business. It has some flexibility because of certain firms’ incentives for early payments or penalties for late payments. If a customer decides to pay early, they can gain a discount on the costs. Any invoice data can also be altered by issuing credit or debit notes.

When to Use Invoice Vs Estimate?

An estimate and an invoice have very different purposes for the business and parties involved. Let us take a look at their main difference in use and how it helps businesses:

When to Use Estimates?

Here are three typical explanations for why your company could rely on an upfront estimate before accepting a job:

You are Unaware of the Precise Material Costs

To create an estimate, jot down a general idea of what the project entails and add more specifics as you go. This is especially true when starting a new project or attempting to meet a specific set of customer needs.

Your Client’s Expectations are Unclear

If your customer is unclear about the project’s specifications, you might begin by providing an approximate estimate. You may work with the customer to make changes as needed along the process.

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You want to Assist Customers with Various Stages of the Process

When working in stages, it is almost inevitable that you will need your client’s input to change the cost, timetable, logistics, and other key factors.

When to Use Invoices?

To Request Payment from a Client

It is a formal document used to seek money from clients or consumers. After you have supplied or delivered your service or commodities to your customer, you must send an invoice listing all of the products and the expenses. It includes the due date, cost, line items, and other details, that a business sends and helps create a cash flow in a timely manner.

Records and Materials for Sale

Invoices maintain track of a company’s inventory as well as its sales or supply. It keeps track of when a product is sold or a project is completed, as well as the total amount of income earned. A record of invoices also tracks the total amount of sales and supplies used by the business.

By using Past Data, Invoices may Anticipate Future Revenue

By predicting demand and developing effective marketing campaigns, you can change your inventory and target the right customers with the right products at the right time. Invoices serve as a trustworthy data source during audits and as a supplement to the information you provide on tax forms.

How to Convert the Estimate into an Invoice?

To convert estimates to invoices, you must provide more specific information and other invoice features.

Estimates do not include details such as the completion date, line items, or purchase units. These details may have to be included. Similarly, the invoice must also include tax information.

Creating an invoice from an estimate is simple when using invoicing software like Moon Invoice. Here are the steps:

Step 1: After logging into Moon Invoice, navigate to the Estimates module on the Sales section of the left sidebar


Step 2: Choose the estimate to convert to an invoice


Step 3: Check all of the required details and make any changes to the final invoice that have occurred throughout the project’s completion.


Step 4: Click “Convert to invoice” at the top of the estimate page


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Difference Between Estimate and Quote


  • An estimate is only an estimation, and it might be altered even after the project has begun.
  • Estimates, as opposed to quotes, are significantly more malleable. It only provides an approximation. In addition, a client in need of service may obtain quotes from different firms, including yours, to compare pricing and choose the best one.
  • For easy, straightforward tasks, an estimate may suffice. Estimates are best suited for works that may be completed in a few hours or days with minimal consumption of materials or other expenses.


  • When you provide a consumer with a quote, you are committing to that fixed price and timeframe as a service provider.
  • Quotes are legally binding. When you quote an exact price to a client, it becomes legally binding in the same way that a contract does. Your client is not compelled to accept your quote and the costs involved, but if they do, you must honor the rates and terms you first specified.
  • A quote, on the other maybe be a better option for larger projects because it includes a detailed breakdown of your fees.

Easily Create Invoices & Estimates with the Help of Moon Invoice

By automating, accelerating, and managing the invoicing process using sophisticated invoicing software, you can make sure that your invoices are getting paid on time. By automating time-consuming routine tasks like invoicing and data maintenance, Moon Invoice manages your invoices and estimations so you can sit back and unwind.

You can easily control the look and feel of your bills and estimates by simply choosing from the numerous templates. The estimate or invoice can be modified to meet your specific needs.

With a single click of a button, Moon Invoice also converts estimates into invoices.

Simply create an estimate and convert it into a variety of further accounting documents, such as an invoice, and a bill that conforms with company and tax requirement details. You may also organize and retrieve all of your created estimates and invoices in one place. You can also create recurring invoices easily.

Summing Up

The estimate is authorized at the beginning of a purchase sale and an invoice is generated with all revisions when you settle your customer’s account. These agreements are essential to the successful completion of any business transaction with a client.

You can make estimates and invoices more quickly and simply by using efficient invoicing software like Moon Invoice.