What is a proforma invoice?
A proforma invoice is a preliminary invoice sent before goods are shipped or services are delivered. It shows the buyer exactly what they will be charged: the items, quantities, prices, taxes, shipping and terms. It is a commitment to sell on those terms, not a demand for payment of a completed sale.
Because nothing has been supplied yet, a proforma invoice is not a tax invoice and is not recorded as a sale in your accounts. Once the order is confirmed and delivered, you issue a regular (commercial) invoice.
When to use a proforma invoice
- The buyer must pay in advance or pay a deposit before you ship
- The buyer needs a document to arrange financing, a letter of credit or an import licence
- An international buyer needs prices and weights to prepare for customs
- The buyer’s purchasing department needs a formal price to approve the order
- You want the buyer to confirm the details before you produce or ship anything
Proforma invoice vs. quote vs. commercial invoice
A quote offers prices for the buyer to accept or decline. A proforma invoice usually comes later, when the buyer has agreed to buy and needs a document in invoice form. A commercial invoice is the final invoice issued when the goods are sold and shipped; it is the one used for payment, accounting and, for exports, customs clearance.
Customs rules differ by country. Many authorities accept a proforma invoice for shipments that are not sales, such as samples or returns, but expect a commercial invoice for goods that have been sold. Check with your carrier or customs broker before you ship.
How to create a proforma invoice with BillOak
- The editor above is set to Proforma Invoice, with Proforma # and Valid Until fields
- Add the buyer’s details and each item with quantity and price
- Add tax, discounts and shipping so the buyer sees the full amount
- Record a deposit in Amount Paid if one has already been received
- Download the PDF: it states that the proforma is not a tax invoice
Frequently asked questions
Is a proforma invoice legally binding?
It is not a tax invoice and does not record a sale. It does set out the terms you are offering, so treat it like a firm offer and only send prices you are prepared to honour until the Valid Until date.
Can I convert a proforma invoice into a final invoice?
Yes. Switch the document type from Proforma Invoice to Invoice. Your items and details stay in place; update the number and dates and download the final invoice.
Should a proforma invoice include tax?
Yes, show the tax the buyer will pay so the total is accurate. The tax only becomes due when you issue the final invoice or supply the goods, depending on your local rules.
Does it cost anything?
No. BillOak is free with no signup. Your data stays in your browser and you can download unlimited proforma invoices.