What is a proforma invoice?
A proforma invoice is a preliminary invoice the seller sends the buyer before a sale is finalised or goods are shipped. It sets out the goods, quantities, prices and terms of sale in writing; it is not an invoice for tax or accounting purposes. This guide explains what it is used for, what it contains and how it differs from a commercial invoice.
The nature of a proforma invoice
Latin “pro forma” means “as a matter of form”. A proforma invoice shows in advance how a sale will be invoiced: the buyer sees what it will buy, at what price and on which terms; the seller puts its offer in writing.
When is it issued?
- Quotation: the buyer wants the exact price and terms before purchasing.
- Advance payment: if the seller requires payment before shipping, the buyer pays against the proforma invoice.
- Opening a letter of credit: the buyer’s bank often opens the credit on the amount and terms of the proforma.
- Import permits and foreign exchange: some countries require a proforma for import licences, inspection certificates or currency transfers.
- Free-of-charge shipments: for samples or temporary imports, where there is no sale, a proforma may be used to show a customs value (depending on national rules).
What does a proforma invoice contain?
The content is very close to a commercial invoice; the difference is that it is clearly marked “PROFORMA” and states the terms of the offer:
- The words “Proforma Invoice” clearly in the title
- Names, addresses and tax numbers of seller and buyer
- Document number, date and validity period (e.g. “valid for 30 days”)
- Description of the goods, HS code, quantity, unit, unit price and total; currency
- Terms of delivery: the Incoterms rule and place (e.g. “FCA Istanbul Incoterms® 2020”)
- Payment terms (advance, letter of credit, documentary collection, open account) and bank details
- Estimated shipment date and mode of transport
- Approximate net/gross weight and number of packages (for transport planning)
- Country of origin
Proforma vs commercial invoice
| Proforma invoice | Commercial invoice | |
|---|---|---|
| When | Before sale and shipment | When the sale is made and goods ship |
| Purpose | Quotation, prepayment, letter of credit, permits | Records the sale, requests payment, customs declaration |
| Tax / accounting | Not booked, no VAT liability | Basis for tax and accounting entries |
| Customs | Not sufficient for a commercial export/import | Core document of the customs declaration |
| Can it change? | May be updated during negotiation | Shows the final amount |
At shipment, the commercial invoice, the packing list and the CMR are prepared together. If price, quantity or terms differ between the proforma and the commercial invoice, both parties should know why (e.g. an order change); under a letter of credit, the documents presented must match the credit terms exactly.
Points to watch
- State a validity period. An open-ended quote can bind the seller when exchange rates or material prices move.
- Choose the right Incoterms rule. For goods moving by truck use FCA rather than FOB and CIP rather than CIF.
- Get the HS code right. The buyer’s import duties and permits depend on it.
- Verify bank details for prepayments. Fake proforma invoices are used in payment-diversion fraud; confirm account details by phone.
Preparing the shipping documents together
Once the order is confirmed, CMRyaz lets you prepare the commercial invoice, packing list and CMR from the same data, so parties, goods and weights stay consistent across all three.
Frequently asked questions
Is a proforma invoice an official invoice?
No. It is a quotation and information document; tax and accounting entries follow the commercial invoice issued when the sale takes place.
Can goods be cleared through customs with a proforma invoice?
For commercial exports and imports the core customs document is the commercial invoice. A proforma may be accepted for free-of-charge shipments such as samples, where national rules allow.
Is a proforma invoice binding?
On its own it is an offer. When the buyer accepts it, places an order or makes an advance payment, a contract may arise, depending on its terms and the applicable law.