What is a proforma invoice?
A proforma invoice outlines a proposed sale, including goods, quantities and prices, before the final invoice. Buyers may use it to arrange prepayment or provide transaction details for shipping. Label it clearly: a proforma is generally not a final tax invoice, and the underlying agreement and payment can have separate legal and tax effects.
The Proforma Invoice Generator marks the document clearly so nobody mistakes it for a real one. Proforma Invoice Generator
The two jobs it actually does
Prepayment. A new customer with no credit history wants to pay before you ship, and their finance department will not release money without a document to pay against. A proforma is that document.
Shipping information. A proforma may describe the goods and proposed value for a carrier or customs process. Check the destination's document requirements; a proforma is not sufficient for every shipment.
How to keep the records clear
Do not treat the proforma document alone as proof that a sale was completed or that tax is due. Keep any payment, supply and final invoice records separately. The time a tax invoice is required and when tax becomes due depend on the jurisdiction and the transaction.
Questions people ask next
Is a proforma invoice legally binding?
The heading alone does not determine the contract. Whether the parties are bound depends on their agreement, conduct and applicable law.
Can I reclaim VAT on a proforma invoice?
A proforma is generally not the VAT invoice used to support an input-tax claim. Ask the supplier for the required VAT invoice and follow the rules that apply to your transaction.
What should it say on it?
The words proforma invoice, prominently. A document that looks like an invoice and is not one causes more confusion than any other piece of business paperwork.