Proforma Invoice vs Commercial Invoice vs Quotation: Key Differences Explained
In business and international trade, documentation matters.
Many professionals search for “proforma invoice vs commercial invoice vs quotation” because these three documents often look similar but serve very different purposes.
Using the wrong document can cause:
- Payment delays
- Customs issues
- Rejected approvals
- Accounting confusion
In this guide, you’ll clearly understand:
- What a quotation is
- What a proforma invoice is
- What a commercial invoice is
- The key differences between them
- When to use each document
The image below explains the difference between a proforma invoice, commercial invoice, and quotation in a simple visual format.
Read More : – Invoice Generator – Meaning, Format, Example & Online | GoSetle®
What Is a Quotation?
A quotation is a price offer sent by a seller to a potential buyer before any agreement is made.
It answers one basic question:
“How much will this cost?”
Common Uses of a Quotation
- Price negotiation
- Budget approval
- Initial discussion with a buyer
A quotation is not a legal demand for payment and does not confirm a sale.
What Is a Proforma Invoice?
A proforma invoice is a formal preliminary invoice sent after a buyer agrees to the quotation but before goods or services are delivered.
It confirms:
- Agreed prices
- Quantities
- Delivery terms
- Payment terms (for reference)
However, a proforma invoice:
- Does not request payment
- Is not recorded in accounting books
Businesses usually create proforma invoices using the Proforma Invoice Generator on GoSetle to avoid formatting and calculation errors.
What Is a Commercial Invoice?
A commercial invoice is the final legal invoice issued after goods are shipped or services are completed.
It is used to:
- Request payment
- Record revenue in accounting
- Clear customs in international trade
Unlike a proforma invoice or quotation, a commercial invoice creates a legal obligation to pay.
Read More : – When Is a Proforma Invoice Required in International Trade? A Complete Guide
Key Differences Explained (Comparison Table)
| Feature | Quotation | Proforma Invoice | Commercial Invoice |
|---|---|---|---|
| Issued when | Before agreement | After agreement, before delivery | After delivery |
| Purpose | Price offer | Confirmation of terms | Request for payment |
| Legal payment demand | ❌ No | ❌ No | ✅ Yes |
| Accounting entry | ❌ No | ❌ No | ✅ Yes |
| Used in customs | ❌ No | Sometimes | ✅ Yes |
| Buyer commitment | None | Partial | Full |
When Should You Use Each Document?
✔️ Use a Quotation When:
- A customer asks for pricing
- Terms are still negotiable
- No agreement exists yet
✔️ Use a Proforma Invoice When:
- The buyer has agreed to the price
- Goods are not yet shipped
- Approval is needed for export, import, or banking
This is especially common in international trade and B2B transactions.
✔️ Use a Commercial Invoice When:
- Goods are shipped or services completed
- Payment is due
- Customs clearance is required
A commercial invoice is mandatory for final billing.
Why Businesses Get Confused Between These Documents
Confusion happens because:
- All three show prices and items
- Layouts often look similar
- Terminology varies by country
Understanding the transaction stage solves this confusion:
- Before agreement → Quotation
- Before delivery → Proforma Invoice
- After delivery → Commercial Invoice
How to Create These Documents Professionally
Manually creating documents can cause:
- Pricing errors
- Missing details
- Compliance issues
That’s why businesses now use online tools:
- Quotation tools for pricing offers
- Proforma Invoice Generator for pre-sale confirmation
- Invoice tools for final commercial invoices
This ensures accuracy and global acceptance.
Read More :-What Does a Proforma Invoice Mean? Definition, Uses, and How to Create One Online
Which Document Is Most Important in International Trade?
All three play a role, but:
- Quotation starts the conversation
- Proforma invoice supports approvals and compliance
- Commercial invoice completes the transaction
Missing or misusing any of them can delay shipments or payments.
Conclusion
Understanding the difference between a quotation, proforma invoice, and commercial invoice is essential for smooth business operations.
Each document serves a unique purpose at a specific stage of a transaction.
Using the correct one avoids confusion, delays, and compliance problems.
For accurate and professional documentation, businesses rely on tools like theGoSetle® Proforma Invoice Generator to create error-free proforma invoices before moving to final billing.
