Proforma invoice vs. commercial invoice

What a proforma invoice is for

A proforma invoice looks like an invoice but is really a detailed offer. It is sent before goods are shipped or services delivered, often after a quote is accepted, so the buyer can arrange payment, financing or import paperwork.

Because no sale has taken place, a proforma invoice is not a tax invoice and is not entered in your sales ledger. It usually carries a validity date, after which the prices may change.

What a commercial invoice is for

A commercial invoice is the actual bill for the sale. It is the document the buyer pays against, the one you record as revenue and, for exports, the main document customs authorities use to check the goods, their value and the duties and taxes due.

For domestic sales, your normal invoice is the commercial invoice. The term is used most in international trade, where the commercial invoice travels with the shipment or is submitted electronically with the customs declaration.

Side-by-side differences

• Timing: proforma before the sale; commercial invoice once goods are sold and shipped
• Purpose: proforma to confirm terms and enable payment or financing; commercial invoice to demand payment and clear customs
• Accounting: a proforma isn’t recorded as a sale; a commercial invoice is
• Tax: a proforma isn’t a tax invoice; a commercial invoice can be
• Changes: a proforma can be revised; a commercial invoice is corrected only with a credit note

What customs usually expects on a commercial invoice

• Seller and buyer names and addresses (and importer, if different)
• Invoice number and date
• A clear description of each item, quantity and unit value
• HS (Harmonized System) tariff code for each item
• Country of origin of the goods
• Currency, total value and the Incoterms (for example FOB or DAP)
• Weights and number of packages

When customs accepts a proforma invoice

Many customs authorities accept a proforma invoice when no sale is involved, such as free samples, goods sent for repair, returns or temporary exhibitions, or when the final commercial invoice isn’t available yet. Requirements vary by country and carrier, so confirm with your courier or customs broker before you ship.

Example: an export order step by step

• The buyer requests prices and you send a quote
• The buyer accepts and asks for a proforma invoice to arrange payment or an import licence
• You send the proforma with a validity date; the buyer pays a deposit
• You ship the goods with a commercial invoice showing the deposit received and the balance
• Customs clears the goods using the commercial invoice and the other shipping documents

What to put on a proforma invoice

• The words “Proforma Invoice” at the top, so it isn’t mistaken for a final invoice
• A proforma number and the date of issue
• Seller and buyer details
• Each item with description, quantity, unit price and total
• Tax, shipping and other charges the buyer will pay
• Payment terms, delivery terms (Incoterms) and the expected delivery date
• How long the prices are valid

Common mistakes

• Recording a proforma as a sale in your accounts
• Sending a proforma when the buyer needs a tax invoice to reclaim VAT or GST
• Changing prices or quantities on the commercial invoice without telling the buyer
• Leaving out the validity date, so an old price can be held against you

Creating both with BillOak

Use the proforma invoice generator to prepare the proforma: it is labelled Proforma Invoice, has a Valid Until date and states that it is not a tax invoice. When the order ships, switch the document type to Invoice to produce the commercial invoice with the same items. Add export details such as HS codes and country of origin in the item descriptions, and Incoterms, weights and package counts in the notes.