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.