The basics of quotes and invoicing

You might have cause to change the estimate if the time needed, skills required, or materials used varies from your initial expectations. 

To give a customer an accurate estimation, you need to make clear that it is an educated guess and isn’t binding.  

It’s good practice to give multiple estimates depending on the circumstances of the job based on things like best and worst-case scenarios.  

This way your customer won’t be alarmed at the final cost.

The final quote is the fixed price, which once agreed, can’t be changed.  

When putting together the final quote, you should have full knowledge of all the different aspects of the job and be in a position to say with certainty what the total price is going to be.  

If you are not sure whether more work will be needed as the job progresses, you should continue to give estimates.  

You also need to understand what your material and labour costs are, to be able to give your customer a full breakdown. This will help prevent any disputes further down the line.  

It’s also worth putting an expiry date on your quote or estimate, so when the time lapses, it will no longer be valid and you can requote accordingly.  

Once you have completed the work and delivered the service for your customer, you are ready to send them the invoice so you can get paid.  

An invoice is required by law for products and services that you sell in a business capacity.  

This is different from a receipt, which is simply an acknowledgement of payment.  

You can use this invoice generator if you’re looking to create an invoice for the first time:  

This can also be adapted for quotes, estimates and receipts.  

According to GOV.UK, an invoice must include certain information such as: 

• How much the customer needs to pay you  
• When the customer must pay you  
• A unique identification number  
• Your company name, address and contact information  
• The company name and address of the customer you’re invoicing  
• A clear description of what you’re charging for  
• The date the goods or service were provided (supply date)  
• The date of the invoice  
• The amount(s) being charged  
• VAT amount if applicable  
• The total amount owed 

There are different rules around invoicing depending on the legal structure of your company.  

Sole trader invoices

If you’re a sole trader, the invoice must also include your name and any business name being used and an address where any legal documents can be delivered to you if you are using a business name. 

Limited company invoices

If your company is a limited company, you must include the full company name as it appears on the certificate of incorporation. If you decide to put names of your directors on your invoices, you must include the names of all directors.  

VAT invoices

You must use VAT invoices if you and your customer are VAT registered. These include more information than non-VAT invoices. You can read more about these here. 

Once you issue your invoice, you can set your own payment terms, such as discounts for early payment and payment upfront.  

Unless you agree a payment date, the customer must pay you within 30 days of getting your invoice or the goods or service.

A receipt is a buyer's proof of payment for the goods and/or services you have provided.  

A typical receipt might display the date and time of purchase, the name and location of the business, the number of items purchased including prices, the amount of VAT charged, how customers can make returns and the customer’s payment method.  

While it's not a legal requirement, it’s good practice for a business to provide a receipt.   

If it isn't your usual practice to offer a receipt, it's still a good idea to be aware of what a receipt needs to contain if a customer requests one.  

You could do this digitally or handwritten. As a business, you must keep a record of transactions for your tax returns, so people purchasing from you may well do the same.  

It might be a good idea to keep a receipt book handy or download suitable software that allows you to print receipts or send them digitally.