Definition
A proforma invoice is a preliminary bill of sale sent to a buyer before a transaction is finalised. It states the goods or services, quantities, prices and expected total, so the buyer can approve, arrange payment, or use it for customs and internal purchase approvals. It is not a demand for payment and is not recorded as a sale in your books.
Proforma vs commercial invoice
- Proforma invoice: issued before delivery; estimate/commitment; no accounting entry.
- Commercial (tax) invoice: issued at/after delivery; a legal demand for payment; recorded for tax and accounting.
When to use one
- To give a formal quotation the buyer can approve
- For advance-payment or deposit requests
- For customs declarations on cross-border shipments
What it should contain
Seller and buyer details, a clear "Proforma Invoice" label, an issue date and validity, itemised goods/services with prices, estimated taxes and the total — plus payment and delivery terms.