What Is a Proforma Invoice and When Do You Use One?
A proforma invoice looks like an invoice but is not one. Sending the wrong document at the wrong stage of a deal creates confusion about payment obligations. Understanding the distinction saves awkward conversations.
How a proforma invoice differs from a real invoice
A commercial invoice is a formal demand for payment that creates an accounts payable entry for the buyer and an accounts receivable entry for the seller. A proforma invoice is a preliminary document that informs or facilitates the sale, typically before goods are shipped or a contract is signed. It carries no legal payment obligation in most jurisdictions.
When to use a proforma invoice
- International trade: customs authorities use proformas to assess duties before the shipment arrives, especially when the final price is not yet fixed.
- Pre-approval purchases: buyers whose internal systems require invoice-like documents for purchase approval before committing.
- Quote in invoice format: when a client prefers a detailed, invoice-style quote rather than a free-form proposal.
- Deposits: some sellers issue a proforma to accompany a deposit request before the full order is confirmed.
What to include on a proforma invoice
Include the same fields as a standard invoice: your details, the buyer's details, a list of goods or services with quantities and prices, the expected total including applicable taxes, and your payment terms. Add a clear label, such as PROFORMA INVOICE, so the document cannot be mistaken for a payment demand.
What not to include
Do not assign a sequential invoice number from your main invoice series to a proforma. Use a separate numbering series or mark it clearly as a proforma reference. Mixing proformas into your invoice number sequence creates gaps in your records when the commercial invoice follows.
Issuing the commercial invoice
Once the sale is confirmed, send the commercial invoice. It should match the proforma's details unless something changed, in which case update the figures and note the change. Invoice Studio lets you create both invoice types and maintain separate numbering. For general invoice structure, see how to write an invoice.
Common questions
- Is a proforma invoice legally binding?
- No. A proforma invoice is a preliminary document and does not create a legal payment obligation. The commercial invoice, issued after the sale is confirmed, is the binding payment demand.
- Do I need to record a proforma invoice in my accounts?
- No. Proforma invoices are not recorded in accounts receivable or payable. Only the final commercial invoice triggers an accounting entry.
- Can I use a proforma invoice instead of a quote?
- Yes, if the client prefers an invoice-format document. Just label it clearly as a proforma invoice so it is not mistaken for a payment demand. A proforma is appropriate when price, quantities and terms are largely agreed but the sale has not yet been finalised.