What is a Proforma Invoice used for?

A proforma invoice is a preliminary invoice sent by a seller before goods are produced or shipped. It outlines the estimated costs, product details, and payment terms agreed between both parties. Unlike a commercial invoice, which is final and used for customs clearance, a proforma invoice is subject to change and acts as a quote for the upcoming transaction. In export trade, the seller sends a proforma invoice early in the order process. This allows the buyer to review the proposed terms, confirm the details, and often make a deposit. Many exporters request a 30% deposit upfront and collect the remaining balance once production is complete or goods are ready to ship. This document helps both parties align on the order before committing to full production or freight arrangements.

How to create a Proforma Invoice

1. Open IncoDocs

   Open IncoDocs in your browser and navigate to the 'Invoices' section.

2. Create a new Proforma Invoice

   Click on 'New Invoice' and select the Proforma Invoice from the dropdown menu.

3. Fill out & customize your doc

   Fill out document info, customize document fields to your needs and add your company letterhead. If you use Xero or Quickbooks Online, you can also connect your account and autofill data from invoices or quotes in your accounting system.

4. Sign & seal

   Click on the signature box at the bottom of your document to create and place a digital signature then hit “Save & Quit”. On the document preview screen, click on the ‘More’ dropdown button and select “Add company seal” to place a digital stamp.

5. Download or send

   Download or share invoices from IncoDocs in 1-click. You'll know when recipients have viewed your invoice and recipients can even pay the invoice online via credit card for convenience.

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Your questions, answered.

When should I use a Proforma Invoice?

Exporters typically issue a proforma invoice early in the order process often before requesting a deposit or booking freight to give buyers a clear understanding of costs. It’s usually provided after the buyer shows interest but before the order is confirmed. A proforma invoice can help buyers arrange insurance, secure approvals, and plan their payments. It also serves as a reference when preparing the final commercial invoice and related documentation.

Who prepares the proforma invoice?

The seller prepares the proforma invoice. In international trade, this is typically the exporter or supplier. It’s issued generally after receiving a purchase order or quote/pricing request from the buyer.

What is the difference between a Proforma Invoice and a Commercial Invoice?

A proforma invoice is a draft used to confirm the details of a sale before goods are shipped. It shows estimated quantities, prices, and terms, but it’s not final and may change.

A commercial Invoice is issued once the goods have been packed or shipped. It shows the actual quantities supplied and is used for customs clearance and final payment.

The two documents often look similar, but the quantities can differ. This can happen if the supplier has production delays or if fewer goods fit into the container than expected. That’s why the commercial invoice is created after dispatch. It confirms exactly what was shipped and helps avoid issues with customs or payment processing.

Can the proforma invoice be used as a tax invoice?

No, the proforma invoice cannot be used as a tax invoice because it isn’t a final record of sale. It’s a preliminary document that outlines estimated costs and terms before a transaction is completed.

Tax invoices are issued after goods are supplied or services are rendered. They include the actual amount payable, applicable taxes, and meet legal requirements for accounting and tax reporting. A proforma invoice is not used for tax deduction or GST claims and should never be submitted as a substitute for a commercial or tax invoice.

How does a Proforma Invoice work with a Purchase Order?

A Proforma Invoice is typically issued by the seller upon receiving a Purchase Order from a buyer. These are important documents that are used to officially confirm all order and product information to avoid any confusion or problems with the supply and delivery of products. Any additional information agreed upon between the buyer and seller can be included on these documents.

Both parties will have to counter-sign each document as they represent a legally binding agreement between the buyer and seller. If there are any disputes relating to the order or supply of goods, these documents will be referred to in a court of law. Read how importers and exporters digitally countersign Proforma Invoices, Purchase Orders and other Sales Contracts

What information is included on a Proforma Invoice Document?

How do you use a proforma invoice template in trade?

The proforma invoice template provides a structured way for sellers to present proposed transaction details to buyers. The seller fills in specific data about the goods and terms, such as agreed prices and advance payment requirements. Once the proforma invoice template is filled, it is sent to the buyer to help arrange financing or secure necessary import approvals. This template aids in aligning both parties on the terms, facilitating the smooth progression to production or shipment.

How can proforma invoice templates facilitate international trade?

A proforma invoice template helps exporters present key order details in a clear and consistent format. It outlines product descriptions, prices, shipping terms, and payment instructions before the goods are shipped. This improves communication between buyers and sellers and reduces the risk of disputes.

A well-prepared proforma invoice for export also supports customs clearance, freight bookings, and international payment approvals. Buyers can use it to apply for import permits or arrange letters of credit before shipment.

At IncoDocs, we provide a free proforma invoice template designed for global trade. It includes all required fields and helps sellers meet international documentation standards. You can fill it out online, sign and stamp it digitally, and send it to buyers in just a few clicks.