What is a proforma invoice?
Learn why businesses issue preliminary invoices and how they differ from final commercial invoices.
A proforma invoice is a preliminary description of an expected transaction. It can help a buyer approve a purchase, arrange payment, or review shipping information before a final invoice is issued.
Common uses
Businesses use proforma invoices when the final transaction is expected but not yet complete. They may support internal approval, advance payment discussions, import planning, or a confirmation of expected costs.
Because the transaction is still preliminary, the document should be clearly labelled Proforma Invoice and should not be confused with the final invoice used in the seller's accounts.
- Pre-shipment transaction summary
- Advance payment request
- Buyer approval
- Expected tax and delivery information
Information to include
Include the seller and buyer, date, reference number, item descriptions, quantities, expected prices, delivery terms, and validity period. Add a note explaining that the document is preliminary where appropriate.
When quantities, taxes, exchange rates, or shipping costs may change, state the assumptions used to calculate the provisional total.
Replace it at the right time
Once the transaction is confirmed or completed, issue the final document required for the sale and keep the references connected. Do not rely on a proforma invoice as a universal replacement for a legally required tax or commercial invoice.
This guide provides general educational information and is not legal, accounting, or tax advice. Requirements vary by country, industry, and transaction.