Quotation vs Invoice: Key Differences for Sri Lankan Businesses
Many business owners in Sri Lanka confuse quotations with invoices, leading to tax accounting mistakes and customer misunderstandings. Here is a clear breakdown of legal, operational, and tax differences.
At a Glance Comparison
| Feature | Quotation (Estimate) | Tax Invoice |
|---|---|---|
| Purpose | Proposes prices and terms before work commences. | Demands payment for completed work or delivered goods. |
| Timing | Issued during inquiry / bidding phase. | Issued after customer accepts quote and services are delivered. |
| Legal Nature | Offer to contract. Binding once signed/accepted. | Legal demand for debt settlement & tax accounting voucher. |
| IRD Tax Liability | Does NOT trigger VAT accounting liability with IRD. | Triggers official VAT output accounting obligation. |
| Payment Obligation | Client can decline or renegotiate terms. | Customer is legally obligated to settle the balance. |
When Should You Issue a Quotation?
Always issue an official quotation first when:
- The client requests a price estimate for custom services (CCTV, Solar, Construction, AC servicing).
- You need to specify warranty coverage, payment stages, or delivery schedules before buying materials.
- You want to protect your business against exchange rate fluctuations by specifying a 14 or 30-day validity window.
Create a Professional Quotation in 2 Minutes
Free PDF download formatted with LKR, optional VAT, and standard Sri Lankan business terms.
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