What is a proforma invoice?
A proforma invoice is a good-faith estimate of a sale, sent to the buyer before the goods are delivered or the service is performed. It looks like an invoice – seller and buyer details, a description of the goods, quantities, prices, taxes and shipping – but it is not a request for payment and is generally not treated as a tax invoice. Once the order ships, the seller issues a final commercial invoice.
When is a proforma invoice used?
- Advance payment or deposits. Many sellers ask for full or partial payment before production starts; the proforma tells the buyer exactly how much to pay.
- International trade. Importers often need a proforma to apply for an import licence, arrange foreign currency, or open a letter of credit with their bank.
- Customs pre-clearance. Customs brokers may use the proforma to estimate duties before the commercial invoice is available. Check your destination country's requirements.
- Internal purchase approval. A buyer's finance team may need a formal document with the final price before raising a purchase order.
What to include
- The words "Proforma Invoice" clearly at the top, so it is not mistaken for a final invoice
- Seller and buyer names, addresses and contact details (plus tax or import registration numbers where relevant)
- A proforma number and issue date, and a "valid until" date for the prices
- Itemised goods or services: description, quantity, unit price and total (for exports, add HS codes, country of origin and weights in the description)
- Shipping cost, Incoterms (for example FOB or CIF) and expected delivery date
- Payment terms and bank details if a deposit or prepayment is required
Proforma invoice vs commercial invoice vs quote
| Document | When | Purpose |
|---|---|---|
| Quote | Before the buyer commits | Offer a price; buyer can accept or negotiate |
| Proforma invoice | After the buyer agrees, before delivery | Confirm the exact terms; support prepayment, import or customs paperwork |
| Commercial invoice | When goods ship or work is delivered | Request payment; the record for tax and accounting |
If the final quantities or prices change, the commercial invoice should show the actual amounts, not the proforma figures. Read more in our guide to invoices, receipts and related documents.
Frequently asked questions
Is a proforma invoice legally binding?
A proforma is generally a commitment to sell on the stated terms rather than a demand for payment. It is not usually treated as a tax invoice, so you still issue a final commercial invoice. Rules vary by country, so check local requirements for regulated goods or trade.
Do I record a proforma invoice in my accounts?
Usually not as revenue. Most businesses record the sale when they issue the final invoice. If the buyer pays a deposit against the proforma, record it as a customer deposit or advance until the invoice is issued.
Can I use a proforma invoice for customs?
Some customs authorities accept a proforma when the commercial invoice is not yet available, often on the condition that the final invoice follows. Ask your freight forwarder or customs broker before shipping.
How is the proforma number different from an invoice number?
Use a separate series (for example PF-001) so proformas never use up numbers in your invoice sequence. The final invoice can reference the proforma number.
