Invoice Types

Proforma Invoice: What It Is and When to Use It

A good-faith estimate issued before a sale, formatted like an invoice.

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What Is a Proforma Invoice?

A proforma invoice is a preliminary bill issued before goods are shipped or work is delivered. It looks like an invoice and carries the same line items, quantities, prices, and totals — but it is a statement of what the sale will cost, not a demand for payment against a completed sale.

Buyers use them to get internal approval, arrange finance, apply for an import licence, or open a letter of credit. Sellers use them to confirm scope and price in writing before committing resources to a job.

Because it is not a record of a completed transaction, a proforma invoice does not belong in your sales ledger and is not the document a buyer pays tax against. Once the sale is real, a commercial or tax invoice replaces it.

When to Use It

  • A buyer needs a formal price document to obtain approval or funding before ordering.
  • You are agreeing scope and price on a project and want the numbers in an invoice-shaped document.
  • An importer needs documentation to apply for a licence or arrange payment in advance.
  • You want a deposit or advance payment against an agreed total before starting work.

Who Uses It

  • Exporters quoting international buyers
  • Freelancers and agencies confirming project scope and price
  • Manufacturers taking custom or made-to-order work
  • Wholesalers quoting bulk orders to trade buyers

Benefits of a Proforma Invoice

  • Removes ambiguity about price and scope before anyone commits.
  • Gives the buyer a document their finance team can act on.
  • Speeds up the real invoice — the line items are already agreed.
  • Creates a written record of what was quoted if the scope later changes.

Fields to Include on a Proforma Invoice

The fields below are the ones businesses commonly include. They are a practical starting point, not a statement of what any particular country requires.

  • The words "Proforma Invoice" clearly on the document
  • Your business details and the buyer’s details
  • A proforma reference number and issue date
  • Validity period — how long the quoted prices hold
  • Description, quantity, and unit price for each line
  • Estimated tax, shipping, and any other charges
  • Estimated total and the currency
  • Proposed payment terms, including any deposit required

Common Proforma Invoice Mistakes

Making it indistinguishable from a real invoice

If the document is not clearly labelled as proforma, it can be posted as a sale and end up in a tax return.

Recording it as revenue

A proforma is not a completed sale. Booking it inflates your figures and creates a reconciliation problem later.

No validity period

Without an expiry, a quote from eight months ago can be produced as binding when your costs have moved.

Reusing the invoice number sequence

Proformas should have their own reference series so your invoice numbering stays continuous and auditable.

Proforma Invoice Best Practices

  1. 1Label it unmistakably and keep a separate reference series for proformas.
  2. 2State a validity period and what happens to the price after it lapses.
  3. 3Itemise estimated tax and shipping separately so the buyer sees the real landed cost.
  4. 4Note that figures are estimates and will be confirmed on the final invoice.
  5. 5Convert the proforma into the real invoice from the same data so nothing drifts.

Proforma Invoice FAQs

Is a proforma invoice legally binding?

A proforma is generally treated as an offer or estimate rather than a demand for payment, but how it is treated depends on your contract and your jurisdiction. If the commitment matters, put it in a signed agreement rather than relying on the document type.

What is the difference between a proforma invoice and a quote?

The content is similar; the format and audience differ. A quote is usually a sales document written for the buyer, while a proforma is laid out as an invoice so it can be processed by a finance, banking, or customs workflow.

Can a customer pay a proforma invoice?

Buyers often do pay against one, typically as an advance or deposit. When they do, issue a proper invoice for the completed sale so your records show the transaction, not just the estimate.

How do I create a proforma invoice?

Build it like a normal invoice, title it "Proforma Invoice", give it its own reference number, and add a validity date. PDF Invoice Pro lets you set a custom document title and download the result as a PDF for free.

Create a Proforma Invoice Now — Free

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Proforma Invoice Templates

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Further reading

Guides on this site that go deeper on the topics above.