What is Pro Forma Invoice?

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Pro Forma Invoice

What is a Pro Forma Invoice?

A Pro Forma Invoice is also known as an estimate or a quote. It is a preliminary “Bill of Sale” sent to a buyer before the delivery of goods. It outlines the seller’s intent to complete this delivery for a specific price. A Pro Forma Invoice is not considered a ‘true’ invoice as it hasn’t been agreed upon yet, but it’s mostly looked at as a ‘notification.’ 

 

How is Pro Forma Invoice different from a Commercial Invoice? 

A Pro Forma Invoice is very much like a Commercial Invoice, except it contains price estimates, instead of actual final prices. It is a more generalized invoice and serves as an ‘expectation’ of how much money must be paid after the sale is finalized. 

The Pro Forma Invoice often looks exactly like a Commercial Invoice but customs authorities don’t view it as a legit document, so it cannot be used as a Commercial Invoice.

 

Why are Pro Forma Invoices used? 

In a way, a Pro Forma Invoice is used to streamline the sales process. After agreeing upon the terms of a Pro Forma Invoice, there’s no going back into negotiations because this sets an ‘agreement’ between the manufacturer and the buyer. 

 

Takeaways from Pro Forma Invoice: 

  • These are not official documents and provide the buyer with a precise sale price- an accurate amount of charge will be billed after the completion of the transaction. 
  • These are helpful supplementary documents that guide the seller and the buyer in the purchase process. 

   

  

  

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