Guide
Proforma invoice: what it is, when to use it, and an example
A proforma invoice is a preliminary bill sent before work or shipment. Learn when to use one, how it differs from a commercial invoice, and see an example.
Updated · By PayToMe Editorial
A proforma invoice is a preliminary invoice that tells a buyer what they will be charged before the work is done or the goods ship. It looks like an invoice but is not a demand for payment and is not a sale on your books. You issue the final invoice later. This guide explains when to use one, how it differs from a commercial invoice, and what to put on it.
What a proforma invoice actually is
“Pro forma” is Latin for “as a matter of form.” In business it means a document prepared in advance, based on what is expected to happen. A proforma invoice is a statement of your intended charges, written in invoice format, sent before the transaction is complete.
Three things make it different from a regular invoice.
- It is a promise, not a bill. The buyer is not yet obliged to pay the amount shown, unless you have agreed otherwise in a contract.
- It is not a record of income. Most businesses record revenue only when they issue the final invoice or deliver the goods or services.
- It can change. If the order grows, the freight cost moves or the scope shifts, you update the document or issue a new one.
Because it looks like an invoice, buyers can use it for things a plain quote does not cover: requesting a purchase order from their finance team, applying for an import license, arranging a letter of credit or a bank transfer from a country with foreign exchange controls, or getting budget approval.
When to use a proforma invoice
You do not need one for every sale. It earns its place in a handful of situations.
Export and import orders
A buyer abroad often needs a document showing the goods, quantities, values and shipping terms before they can pay, apply for a permit or ask their bank to release funds. A proforma invoice gives them that. For U.S. imports, Customs and Border Protection describes a pro forma invoice as an alternative the importer files at entry when the commercial invoice cannot be produced, with the actual invoice due afterward. The guide notes that it must still contain enough data to examine, classify and appraise the goods. Requirements change by country and by shipment, so check with your customs broker or the relevant agency before you rely on one.
Large or custom orders that need prepayment
If you build to order, such as furniture, signage or a custom software license, you may want a deposit before you buy materials. A proforma invoice states the full price and the deposit you are asking for. The buyer can approve it, and you start work when the deposit arrives.
Buyers who need paperwork before paying
Companies often cannot release money without a document to attach to a purchase request. A proforma invoice answers that without forcing you to create a real invoice and a receivable you may later have to void.
Pricing that depends on a future event
If the final total depends on freight, customs duties or measured quantities, a proforma lets you show an estimated figure and the assumptions behind it.
Proforma invoice vs commercial invoice
The commercial invoice is the final, binding bill for a completed sale. In international trade it is also the main document customs uses to value and classify goods. The proforma invoice comes first and is only an estimate.
| Item | Proforma invoice | Commercial invoice |
|---|---|---|
| Timing | Before delivery or shipment | At or after shipment or completion |
| Purpose | Show expected charges, support approvals, prepayment or permits | Request payment and document the actual sale |
| Binding? | Not normally, unless you agree otherwise | Yes, the buyer owes the stated amount |
| Recorded as sale? | Usually no | Yes |
| Can it change? | Yes, freely | Only through a credit memo or a corrected invoice |
| Numbering | Separate series, such as PF-0001 | Your normal invoice sequence |
Think of it as a rehearsal. The proforma shows the buyer the number you expect. The commercial invoice is the performance, with the quantities that actually shipped and the final totals.
You can read the formal definition in the commercial invoice glossary entry, and a broader comparison of bill and receipt documents in invoice vs receipt.
What to include on a proforma invoice
Start with everything on a normal invoice, then add the fields that make a proforma useful. For the base list, see what to include on an invoice.
- Title it clearly. Put “Proforma Invoice” at the top. If it is mistaken for a final invoice, the buyer may pay twice or your accountant may book revenue early.
- Add a reference number and date. Use a separate series and add a validity date.
- Identify both parties. Include legal names, addresses and, where relevant, tax or registration numbers.
- List the goods or services. Give descriptions, quantities, unit prices and any units, so the buyer can match them to a purchase order.
- Show costs separately. Subtotal, discounts, shipping, insurance, taxes or duties if known, and the grand total. Mark estimated items as estimates.
- State the terms. Currency, incoterms for international sales, payment terms, the deposit you want, and how the buyer should pay.
- Add a disclaimer. A line such as “This is a proforma invoice and not a request for payment” prevents confusion.
- For export, add shipping details. Country of origin, port of loading, and a note on the purpose of the document if the buyer asked for one.
A worked example
Imagine a small ceramics studio quoting a restaurant that wants 40 custom dinner plates and 40 bowls. The studio wants 50 percent up front to buy glaze and clay. It sends this proforma invoice.
PF-0007 · Proforma · Harbor Clay Studio · valid 14 days
| Item | Qty | Amount |
|---|---|---|
| Custom dinner plate, hand glazed | 40 | $1,120.00 |
| Custom soup bowl, hand glazed | 40 | $780.00 |
| Crating and local delivery | 1 | $85.00 |
| Total | $1,985.00 | |
Common mistakes
- Sending it as the only document. A proforma is not a final bill. Always follow it with a real invoice once the sale is complete.
- Sharing the numbering sequence. If proformas use your invoice numbers, your real sequence will have gaps that confuse auditors and tax authorities.
- Booking it as revenue. No sale has happened. Record the money only when you issue the final invoice or when your accountant says it is appropriate.
- Leaving out an expiry date. An open-ended price is a risk when material costs or exchange rates move.
- Mixing it up with a deposit invoice. If you want money now, issue a deposit invoice. A proforma alone does not create a clean record of what the buyer owes.
- Assuming it satisfies customs. Customs authorities set their own requirements. Confirm what your destination country accepts.
Checklist before you send one
- The words “Proforma Invoice” are at the top.
- It has its own reference number and a validity date.
- Buyer and seller details, including tax IDs where required, are correct.
- Every line has a quantity, a unit price and a description the buyer can match to their order.
- Estimated costs are labeled as estimates.
- Currency, payment terms, and deposit amount are stated.
- There is a line saying it is not a request for payment.
- You know which document will follow: a deposit invoice, a final invoice, or both.
Where PayToMe fits
The free proforma invoice generator is live today and uses the same exact money math PayToMe’s other tools use. PayToMe is in public beta, and Via (beta), the assistant, can draft an invoice from a description of the order. Converting a proforma into a final invoice with one tap is in development. Sign in to PayToMe to try it.
Sources
This is general information, not legal or customs advice. The statement about pro forma invoices at entry comes from U.S. Customs and Border Protection’s guide, Importing into the United States. That guide is older, and customs rules, filing methods and time limits change, so confirm current requirements with CBP or a licensed customs broker. For tax treatment of deposits and advance payments, ask your accountant or your local tax agency.