What is a proforma invoice?

A preliminary bill that shows the buyer what they will pay – before the goods ship or the work is done.

A proforma invoice (also written pro forma or pro-forma) is a preliminary invoice sent to a buyer before a sale is completed. It looks like a normal invoice, listing the goods, prices, taxes and total, but it is a statement of what will be charged, not a demand for payment, and it isn’t recorded as a sale in your accounts.

When is a proforma invoice used?

• Advance payment: the buyer needs a formal document to pay a deposit or pay in full before you ship.
• International trade: importers use it to apply for import licences, open a letter of credit or arrange foreign currency, and to prepare for customs.
• Purchase approval: the buyer’s finance team needs it to raise a purchase order or approve the spend.
• Samples and goods sent free of charge: to declare a value for shipping and customs.

Proforma invoice vs commercial invoice

A commercial invoice (or a regular invoice) is issued when the sale happens. It is a request for payment, it is recorded in both parties’ accounts, and it is the main document customs use to assess duty. A proforma invoice comes before it, as a good-faith estimate of that final invoice. Its details can change, and the final commercial invoice should then reflect what was actually shipped.

Proforma invoice vs quote

Both are given before a sale. A quote is an offer the customer can accept or decline. A proforma invoice usually comes once the buyer has agreed to buy, setting out the final terms in invoice format so they can pay or arrange paperwork. In practice, some businesses use one where others use the other.

What to include on a proforma invoice

• The title “Proforma Invoice”, a reference number and the date
• Seller and buyer details, and the shipping address if different
• A detailed description of each item, with quantity, unit price and total
• Taxes, shipping and insurance costs, and the total amount
• Payment terms (for example, 50% advance) and how to pay
• Delivery terms – for exports, an Incoterm such as EXW, FOB or CIF
• For exports: country of origin, HS codes and package weights
• How long the prices are valid

Proforma invoice example

A furniture maker in Malaysia selling to a buyer in the UAE might issue “Proforma Invoice PI-2026-014”: 40 teak dining chairs at RM 450 each, RM 18,000; packing and freight to Jebel Ali, RM 2,200; total RM 20,200; terms 30% advance, balance before shipment; Incoterm CIF Jebel Ali; valid 30 days. When the chairs ship, a commercial invoice follows for the final amounts.

Is a proforma invoice legally binding?

Generally not on its own – it is a preliminary document. If both parties accept its terms it can become part of the sale agreement, so make sure the prices and terms are ones you are prepared to honour. Tax rules differ by country: in most places you don’t charge or report tax on a proforma invoice, only on the final invoice. Check with your tax adviser.

Create a proforma invoice for free – with shipping, taxes and your terms, in any of 17 designs.