Quotation vs proforma vs invoice — when to use which
Five sales documents Vendly produces and the order they typically flow in.
Vendly's sales module has five document types. Most B2B deals walk a subset of them in order; you don't need every step every time. Picking the right document matters because only one of them is a legally binding tax invoice.
| Document | When you issue it | Legally binds… | VAT effect |
|---|---|---|---|
| Quotation | Pre-sale price proposal | Nothing — both sides free | None — not a tax document |
| Sales Order | Buyer confirms intent to buy | The order, not the payment | None |
| Proforma Invoice | Buyer requests an upfront document (often for procurement / forex) | The supplier's offer; not a tax invoice | None — proforma is NOT a tax invoice |
| Tax Invoice | Supply has happened or will within tax period | The supplier to deliver, buyer to pay | OUTPUT VAT is now your liability |
| Credit Note | Reverse / reduce an invoice you've already issued | Reduces the buyer's balance | Reduces output VAT for that period |
A proforma is NOT a tax invoice. Don't claim output VAT on a proforma — KRA can disallow it. Issue the tax invoice (through eTIMS) once the supply has actually happened.
The typical B2B flow
- Quotation — buyer asks for prices, you send a quotation.
- Sales Order — buyer accepts. Convert the quotation to a sales order in one click.
- Delivery Challan — you deliver the goods. Buyer signs the challan.
- Tax Invoice — issued through eTIMS within 7 days of supply.
- Payment Receipt — buyer pays; receipt clears the invoice in your AR ledger.
- Credit Note — only if you need to refund or reduce. Otherwise skip.
Quick-pick decision tree
- Buyer hasn't agreed yet? → Quotation.
- Buyer needs a document to release funds / open an LC / submit to procurement? → Proforma.
- Goods or service supplied? → Tax Invoice (via eTIMS).
- Goods delivered ahead of invoice? → Delivery Challan first, then Tax Invoice.
- Need to cancel or reduce a prior invoice? → Credit Note. Never delete — KRA tracks invoice numbers.
Converting between document types
Each document carries an Accept/Convert action so you never re-key line items. Quotation → Sales Order, Sales Order → Invoice, Proforma → Invoice. The downstream document copies the line items, links back to its source, and starts in DRAFT.
Kenya law that applies
- Value Added Tax Act 2013
Standard rate 16% VAT, exempt and zero-rated supplies, the KES 5m registration threshold, monthly VAT3 return.
- KRA eTIMS — Electronic Tax Invoice Management System
Mandatory e-invoicing system. Every taxable supply must be issued through eTIMS — sales without an eTIMS invoice cannot be claimed as an input by the buyer.