What is a Proforma Invoice?

‘Pro forma Invoice’ is somewhat similar to the invoice. It contains particulars of the goods or services that the buyer has yet to provide. Thus, a supplier/retailer issues a pro forma invoice to the buyer/customer who enquires about the goods or services.

Essentials of Pro Forma Invoice:

It acts as the initial bill of sale.
It is sent to the buyer/customer in advance for goods or services yet to be delivered.
The details mentioned in such invoice includes:

Description of purchased product/service, estimated rates of any commission, taxes, shipment weight, shipping costs/ transport charges, etc.

Pro Forma Invoice vs Tax Invoice:

*Basis*	*Tax Invoice*	*Pro Forma Invoice*
Details mentioned	It provides the names of both the parties, details of goods/services to be supplied, price, quantity, etc.	It provides details of the product/services, the estimated price, time of shipment, terms of sale as well as terms of payment.
Purpose	A tax invoice is used as a document to tell the buyer about the due amount to be paid by him.	Pro Forma Invoice assists the buyer in deciding whether or not the product/service is to be purchased.
Issued	It is issued when payment is due from the buyer.	It is issued when goods/services are not yet delivered to the buyer.
Status of terms	The terms cannot be negotiated once a tax invoice is issued.	The terms can be negotiated between the parties after Pro Forma has been issued.

The Tax invoice represents that the deal is finalized, but a Pro Forma Invoice cannot represent the same as it describes the estimates that can negotiate to finalize the deal.

Pro Forma Invoice vs Quotation:

There are significant differences between the term “proforma invoice and quotation”. Where a quotation contains the estimates of the prices of goods/services yet to be delivered, it is provided by the supplier at the buyer's request. A buyer may receive multiple quotations from various suppliers, considering which the buyer decides from whom to purchase.

And a Proforma Invoice under GST is issued at the final sale stage, which consists of almost exact details of the transaction. The Pro forma Invoice prices and other terms mentioned in such document are negotiable.

Pro Forma Invoice Format:

Though there is no prescribed format for a Pro forma Invoice, it may look similar to a commercial invoice. But it should specify “Pro forma Invoice”.

PRO FORMA INVOICE
Date: ________________________ Proforma invoice: ________________________
SENT BY
Company Name: ________________________ Department: ________________________ Address: ________________________ ________________________ ________________________ Tel./Fax No: ________________________
SENT TO		SHIPPING DETAILS
Company Name: ________________________ Name/Department: ________________________ Address: ________________________ ________________________ Phone No.: ________________________		Number of pieces: _________________ Total Gross Weight:________________ Total Net Weight:__________________ Carrier: ________________________
Description of goods	Quantity	Fees/Taxes	Shipping	SubTotal

TOTAL VALUE

The Pro Forma Invoices are used by various industries such as manufacturing, trading, wholesalers, dealers, import/export, etc. as a tool to help the buyer decide if they want to proceed further with the purchase or not.

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