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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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