A single sale can produce five different documents, and mixing them up causes confusion, wrong payments and arguments over what was agreed. Here is what each one is for and when to send it.
The five documents at a glance
| Document | Purpose | When | Asks for payment? |
|---|---|---|---|
| Quotation | Offers a price for goods or work | Before the customer decides | No |
| Proforma invoice | A preliminary invoice for advance payment, LC or import permits | After the order, before delivery | Advance only |
| Delivery challan | Lists what was delivered, signed by the receiver | With the goods | No |
| Invoice | The official demand for payment | On or after delivery | Yes |
| Receipt | Confirms money was received | When paid | No (confirms it) |
Quotation (estimate)
A quotation tells a potential customer what you will supply and at what price. It should have a "valid until" date because prices change. A quotation is not a bill: the customer owes nothing until they accept it. Once accepted, it becomes the basis of the invoice. Some people use "estimate" for a rough price and "quotation" for a fixed one.
Proforma invoice
A proforma invoice looks like an invoice but is not a final demand for payment and is not normally recorded as a sale. It is used when:
- the customer must pay in advance before you ship;
- an importer needs it to open a letter of credit (LC) or apply for an import permit;
- a company's finance team needs it to approve a purchase.
After delivery, you issue the final invoice and deduct any advance already paid.
Delivery challan
A delivery challan (also called a delivery note) goes with the goods and lists what was delivered and how many, usually without prices. The receiver signs and stamps a copy, which becomes your proof of delivery. It is very common in Pakistan and India for B2B deliveries, transfers between branches, and goods sent on approval.
Invoice
The invoice is the formal request for payment and the main record of the sale for both sides' accounts and tax. It includes the invoice number, dates, items, taxes, total and payment details. See how to make an invoice for everything it should contain.
Receipt
A receipt confirms that you received payment: how much, when, how (cash, bank transfer, cheque, JazzCash and so on) and for what. Customers paying in cash especially need one. Writing the amount in words helps prevent changes to the figures.