Proforma Invoice

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What is a Proforma Invoice?

A proforma invoice is a document that provides detailed information about a proposed transaction. It acts as a quotation, outlining the goods or services offered, along with any related costs such as shipping, taxes, and payment terms. It ensures that both the buyer and seller agree on the details before finalising the transaction. Proforma invoices are commonly used to support applications for financing or import documentation.

Components of a Proforma Invoice

A complete proforma invoice typically includes the following details:

  • Seller’s and buyer’s names, addresses, and contact information

  • Description of goods, including quantity, specifications, and unit prices

  • Terms of sale and payment, such as delivery timelines and payment conditions

  • Shipping method, estimated delivery time, and related charges

  • Optional signatures to add formality or validation, though not legally required
     

How Do Proforma Invoices Work in International Trade?

In international trade, a proforma invoice is often required before goods are shipped. It helps importers obtain permits or licences and can be used by customs authorities to estimate duties and taxes. This documentation helps prevent delays and ensures goods move efficiently across borders.

Difference Between a Proforma Invoice and a Commercial Invoice

A proforma invoice is a preliminary document issued before a sale is confirmed. It provides the buyer with an estimate of the costs involved, but is not a request for payment. A commercial invoice, by contrast, is issued once a transaction is final. It reflects the confirmed sale and is used for both shipping and payment purposes.