Estimates vs. Invoices

Estimates and invoices are both documents you send to clients, but they serve different purposes and have different effects on your books. Mixing them up — or using one when you should use the other — creates confusion for clients and bookkeeping errors on your end.

The Difference

	Estimate	Invoice
What it is	A quote for work you have not done yet	A request for payment for work completed (or in progress)
Is it a legal obligation?	No — it is a proposal	Yes — it is a formal request for payment
Does it affect your books?	No	Yes — it records income and creates an accounts receivable
When to use it	Before work begins	When work is complete (or at agreed billing milestones)
Can it become an invoice?	Yes — convert it in QBO when the work is approved	N/A

Normal Procedure

When to send an estimate

Send an estimate when a client wants to know what something will cost before committing. An estimate:

Sets expectations on scope and price
Gives the client something to approve before you start
Can be converted directly into an invoice in QBO once the work is done

Estimates do not get recorded as income — they have no effect on your books until they are converted.

When to send an invoice

Send an invoice when:

Work is complete and you are requesting payment
You have hit a billing milestone (e.g., 50% deposit, project completion)
You are on a recurring billing schedule (e.g., monthly retainer)

An invoice records income in your books immediately upon creation, regardless of when the client pays.

Converting an estimate to an invoice in QBO

Go to Sales > Estimates and open the estimate.
Click Convert to Invoice (or Copy to Invoice, depending on your QBO version).
Review and update the details — adjust quantities, add any additional charges, confirm the date.
Click Save and Send to send it to the client.

The original estimate is marked as closed and the invoice is created with the same line items.

Abnormal Procedures

You sent an invoice when you meant to send an estimate.

If the client has not paid, you can void the invoice in QBO and send an estimate instead. Go to the invoice, click More > Void. Let your Mesa CPA bookkeeper know so they can confirm the reversal is recorded correctly.

The work came in over the estimate.

Two options: (1) create a new invoice for the full amount and note the estimate was superseded, or (2) convert the estimate and add additional line items. Either way, discuss the overage with the client before sending — billing over estimate without notice is a common source of disputes.

A client approved an estimate verbally but will not approve it in writing.

Convert it to an invoice and send it. The verbal approval is sufficient to begin work and bill. Document the conversation in your records in case there is a dispute later.

FAQ

Does an estimate commit me to a price?

Not legally on its own — but practically, clients expect the final invoice to be close to the estimate. If your estimate is written as a "quote" rather than an "estimate," it may carry more legal weight depending on the jurisdiction. When in doubt, state on the document whether the price is fixed or an approximation.

Can I send a deposit invoice before sending a final invoice?

Yes. Create an invoice for the deposit amount, collect payment, then create a second invoice for the balance when work is complete. In QBO you can also use the deposit/retainer feature to track this more cleanly — ask your Mesa CPA bookkeeper to set it up.

Should I use estimates for recurring clients?

Not necessarily. If a client is on a fixed monthly retainer, you can set up recurring invoices in QBO instead of sending estimates each cycle. Ask your Mesa CPA team to configure this.

Do estimates get included in my revenue?

No. Estimates have no effect on your books. Only invoices (and received payments) affect your revenue and accounts receivable.