What is a proforma invoice and when should you use one?
A proforma invoice is a preliminary bill of sale sent to a buyer before goods are shipped or services delivered. It sets out exactly what will be supplied, at what price and on what terms, but it is not a formal demand for payment and usually isn't recorded as a sale in your accounts. Think of it as a binding, detailed quote that looks like an invoice.
Proforma invoices are especially common in international trade. Importers often need one to apply for import licenses, arrange letters of credit or obtain foreign currency from their bank, and customs authorities may use it to estimate duties before the final commercial invoice arrives. They're also used domestically when a customer must pay in advance before an order is processed.
A good proforma invoice includes seller and buyer details, a reference number, issue date and validity date, a detailed description of each item with quantities and unit prices, the currency, shipping and insurance costs, applicable taxes, payment terms and the estimated total. For exports, add the incoterms, country of origin and HS codes in the notes section.
Use the Shipping / Fees field to include freight costs and select the currency your buyer will pay in. The validity date protects you if exchange rates or supplier prices change before the buyer commits.
Once the buyer confirms and the goods ship, switch the document type to Invoice to issue the final commercial invoice with the same line items. Keeping your proforma and final invoice consistent avoids customs delays and payment disputes.