Proforma Invoice
A proforma invoice is a preliminary bill sent before goods ship. It tells the buyer what they will be charged: items, quantities, prices, freight, and terms. It is not a demand for payment and is not booked as a receivable. Buyers use it to approve a purchase, arrange prepayment, open a letter of credit, or estimate import costs.
When sellers issue a proforma invoice
A proforma invoice comes before the sale is final, when the buyer needs a firm number to act on.
- The buyer must prepay or pay a deposit before production or shipment.
- The buyer needs internal approval or a purchase order raised against a firm price.
- An importer needs to open a letter of credit or apply for an import license.
- Customs or a freight forwarder needs an estimate of the shipment's value in advance.
Proforma vs commercial invoice vs invoice
The three documents look alike but do different jobs.
| Proforma invoice | Commercial invoice | Invoice | |
|---|---|---|---|
| Sent | Before shipment | With an international shipment | After shipment or delivery |
| Demands payment | No | Yes, for export sales | Yes |
| Booked as receivable | No | Yes | Yes |
| Main use | Quote, prepayment, approval | Customs clearance and duty | Billing and payment |
| Can change | Yes, until the sale is final | No | Only by credit or debit memo |
What a proforma invoice includes
Include everything the final invoice will carry, and label it clearly so no one pays or books it by mistake.
- The words Proforma Invoice at the top
- A proforma number and date, plus an expiry or validity date
- Seller and buyer details
- Item descriptions, quantities, unit prices, and totals
- Freight, insurance, and other charges
- Payment terms and delivery terms, such as Incoterms
- For exports: HS codes, country of origin, and estimated weights
From proforma to final invoice
Once the buyer accepts the proforma and the goods ship, the seller issues a standard or commercial invoice with its own invoice number. Any prepayment received against the proforma shows as a payment on that final invoice. If quantities or prices changed in the meantime, the final invoice reflects what actually shipped, not the proforma.
Related Terms
Related Resources
Frequently Asked Questions
A proforma invoice is a good-faith statement of what will be billed, but it is not a demand for payment and is not recorded as a receivable. The final invoice is the binding request for payment.
Sometimes. When the seller requires prepayment, the buyer pays against the proforma, and the payment is applied to the final invoice once the goods ship.
Some countries accept a proforma invoice when the commercial invoice is not yet available, often with a requirement to submit the commercial invoice later. Check with the customs broker for the destination country.
How to Answer "Are You EDI Capable?"
A buyer asked, and you need to answer this week. The four things they are checking, what you can say yes to today, and a realistic date for the rest.
- What a buyer is really asking when they ask this
- The minimum set-up that makes the answer yes
- What you can answer today versus what needs building
- Rough timelines, so you can give a date rather than a maybe
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