What is a Proforma Invoice?
A proforma invoice is a preliminary bill of sale sent to buyers before a shipment or delivery of goods. It provides an estimate of costs and is commonly used in international trade for customs purposes and to help buyers secure financing or import licenses.
What is Proforma Invoice?
A proforma invoice is a document sent by a seller to a buyer before goods are shipped or services are delivered. It provides an estimate of the costs and details of the transaction. Unlike a regular invoice, a proforma invoice is not a request for payment but rather a commitment to deliver goods or services at specified prices. It's commonly used in international trade for customs clearance, import licenses, and to help buyers arrange payment or financing.
Examples:
- A manufacturer sending a proforma invoice to an international buyer before shipping goods
- A service provider providing a proforma invoice to show estimated costs before work begins
- An exporter using a proforma invoice for customs documentation
Related:
When to Use a Proforma Invoice
- International trade: Required for customs clearance in many countries
- Import licenses: Buyers may need it to obtain import permits
- Payment arrangements: Helps buyers secure financing or letters of credit
- Pre-shipment estimates: Provides cost estimates before final delivery
- Customs valuation: Used by customs authorities to assess duties and taxes
- Sample or trial orders: For goods sent for approval before final purchase
Proforma Invoice vs Regular Invoice
| Feature | Proforma Invoice | Regular Invoice |
|---|---|---|
| Purpose | Estimate or commitment | Request for payment |
| Payment Due | No payment requested | Payment required |
| When Issued | Before shipment/delivery | After delivery |
| Legal Status | Not a tax document | Official tax document |
| Used For | Customs, financing, estimates | Payment, accounting, tax records |
| Can Be Modified | Yes, before final invoice | Rarely, requires credit note |
A proforma invoice is a preliminary document used for planning and customs, while a regular invoice is the final bill requesting payment after goods or services are delivered.
What to Include in a Proforma Invoice
A proforma invoice should include all the same information as a regular invoice, clearly marked as "Proforma Invoice":
- Seller's business name and address
- Buyer's name and address
- Proforma invoice number and date
- Description of goods or services
- Quantities and unit prices
- Shipping terms (Incoterms)
- Shipping method and estimated delivery date
- Total amount (estimated)
- Currency
- Payment terms
- Any applicable taxes or duties
Frequently Asked Questions
What is the difference between a proforma invoice and a regular invoice?
A proforma invoice is sent before goods are shipped and is an estimate or commitment, not a request for payment. A regular invoice is sent after delivery and requests payment. Proforma invoices are used for customs, financing, and planning, while regular invoices are used for payment and accounting.
Is a proforma invoice legally binding?
A proforma invoice is not a request for payment and is not a tax document, but it can serve as a commitment to deliver goods at specified prices. The legal status depends on the terms and local laws. It's important to clearly mark it as 'Proforma Invoice' to distinguish it from a final invoice.
When do I need a proforma invoice?
You typically need a proforma invoice for international trade (customs clearance), when buyers need to secure import licenses or financing, for pre-shipment cost estimates, or when sending samples or trial orders. Many countries require proforma invoices for customs documentation.
Can I use a proforma invoice for payment?
While a proforma invoice shows estimated costs, it's not typically used for payment. However, some buyers may make advance payments based on a proforma invoice. The final payment should be made against a regular invoice issued after delivery.
How do I create a proforma invoice?
You can create a proforma invoice using the same format as a regular invoice, but clearly label it as 'Proforma Invoice' instead of 'Invoice'. Include all relevant details about the goods or services, estimated costs, shipping terms, and delivery dates. Our invoice generator can help you create professional proforma invoices.