What is a Proforma Invoice?

A proforma invoice is a preliminary bill of sale sent to buyers in advance of a shipment or delivery of goods or services. Unlike a commercial invoice or standard tax invoice, a proforma invoice is a draft document representing a commitment to supply goods or services for a specific price. It does not demand payment and cannot be used for tax reporting purposes.

When Should You Send a Proforma Invoice?

• Confirming Sales Parameters: Prior to finalizing contract terms, ensuring both parties align on unit pricing and terms.
• Import/Export Customs: International shipping borders often require a proforma invoice to declare shipment values for custom duties checks.
• Securing Pre-Payments: Used when asking clients to deposit initial payments or establish letter-of-credit parameters.

Difference Between Proforma, Quotation, and Final Invoice

A quotation is an initial proposal of costs that does not carry formal invoice terms. A proforma invoice is a more formal, draft representation of the invoice that will eventually be sent, outlining the exact services, HSN/SAC codes, and tax details. The final invoice is the actual legal request for payment that records transaction sales in your ledger. Utilize our free online generator to create custom estimates, or sign up with Invoees to manage estimates and convert quotations to invoices dynamically.