Proforma invoice : how it works

Proforma invoice meaning

As its name indicates, a pro forma invoice is an invoice made "for the form", this document is delivered only to inform, it has no accounting or legal value, it is different from a final sales invoice. At the national level, pro forma invoices are not mandatory and are therefore rarely used, but they are used in international trade. Similar to a standard invoice, it mentions the price, the content of the order, the delivery time and method and the general sales conditions.


Why is a proforma invoice used ?

Thanks to the pro forma invoice, misunderstandings are avoided: both the customer and the supplier have visibility on the goods or services and commercial conditions of the agreement. As it meets the same conditions as a quotation, when the contract is executed and a purchase order is issued, the delivery of the goods can then be made and will be accompanied by the final invoice.

The advantages of this document are many, including:

  • In case of disagreement, it promotes more legal flexibility between the customer and his supplier, the buyer knows what to expect.
  • It facilitates the BtoB relations allowing to guarantee the good recovery of invoice and sales stimulation.
  • It is useful for loan applications and is a real commercial tool to obtain an insurance contract from a bank.
  • This document also offers a purchase or sale authorization to the customs authorities.

The proforma invoice for customs

It is used in case of import or export and when there are requests related to international trade

Thus, a proforma invoice will be necessary : 

  • When goods are to be shipped without a request for payment.
  • For customs clearance in international trade or agreements.

The proforma invoice is indeed necessary when goods are to be shipped abroad, for any non-commercial shipment and for products not intended for sale. This invoice allows to know precisely the conditions of the purchase of a product and to have an authorization from the customs for the purchase or the sale of it (import/export).

For goods or objects not intended for sale (e.g. gifts, returned goods, personal objects, samples), a proforma invoice in 3 copies must be attached to the delivery.

How to make a proforma invoice ?

The invoice must mention the following information:

  • the mention "proforma".
  • the identification of the supplier 
  • the name of the prospect or customer 
  • the date of issue of the document 
  • the details of the goods or services
  • the quantities
  • the total amount due (without taxes)
  • the VAT
  • payment terms
  • delivery times
  • possible deductions
  • the validity of the offer
  • special conditions
  • The currency used for the transaction 
  • Incoterm (delivery conditions: mode, payment, collection, insurance...)

Proforma invoice template: 

proforma invoice example

What is the difference between a pro forma invoice and an official invoice?

The commercial invoice is a document that contains information to facilitate customs clearance for international shipments of goods, but also to calculate the duties and taxes to be paid when your goods enter a territory. It is much more complete than the pro forma invoice and is mandatory for international shipments. It contains the terms of sale, the sale process, binding agreement, all the final details of an international shipment.

The difference between a quotation and a proforma invoice

The proforma invoice is very close to the final invoice, the buyer can use it as a provisional invoice (however, this document cannot be included in the company's accounting). This provisional invoice allows both parties to have an agreement on the service performed. When both parties agree on the terms, from this document it is therefore possible to make a formal invoice. Attention, the mention "pro forma" must be explicit on the document in order not to be included in the accounting. 

  • This invoice, unlike the estimate, is more official as for the negotiation, the differentiating elements are : 
  • the mention of the "pro forma" character on the document 
  • it does not include an invoice number
  • the document can be re-issued according to the negotiations 
  • does not have an accounting value

How to get a proforma invoice?

There are many invoicing software to generate proforma invoices for free, or you can also find a lot of examples as above, however on, our customers benefit from this service for free. Our software creates a proforma invoice for our customers. When you place an order, the proforma invoice is automatically generated from the information you have filled in during your transaction. All you have to do is download it, print it in three copies and attach these documents to your delivery. To send a proforma invoice you can attach it to your parcel.

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