You will be using many types of sales documents in your commercial activity, but the proforma invoice stands out due to the moment it’s sent to the client.
While most bills of sale are sent at the end of the transaction, proforma invoice forms must reach the clients before the products or services are delivered. It’s the document that precedes the formal invoice, and has no accounting value.
This invoice merely used to give a quotation or for customs purposes. It’s still a document that represents your business, so to make it look professional, create it using an excellent proforma invoice template.
What Is a Proforma Invoice?
A proforma invoice is not a binding legal document. It doesn’t even need a number and not meant to be used in accounting reports. With an estimation on time and costs, it outlines the products that the company is going to sell or services that they are going to perform.
The seller issues a proforma invoice to get the initial approval from the client and to make sure they are pleased with all the aspects of the transaction. It’s an informal agreement before the purchase actually starts.
What Is the Purpose of a Proforma Invoice?
The proforma invoice sets the ground for the future purchase. The seller includes the main details of the transaction in this document and sends it to the client to consider. The goal is to get both parties on the same page so that they can move on with the sale.
Proforma invoice forms don’t represent a request for payment; they just offer the client an estimation of what the final amount will be. Every business decides whether and how to use a proforma invoice; these are the most common purposes of this document:
- Some businesses use it to declare the value of the package at the customs office, to make sure the delivery goes well.
- Sometimes sellers send a proforma invoice when they don’t have all the information required by a formal invoice.
- It can be requested by clients so that they can get approval from different departments before making the purchase.
What Should Be Included in a Proforma Invoice?
Even if this isn’t one of the formal and legally binding documents in the sale process, it still needs to be drafted with care. The client will appreciate a well-written proforma invoice, because the initial estimation is important for their budget planning.
If you look at any proforma invoice example, you will find they usually have the same sections:
- The identifying information of the seller and the buyer.
- The list of the products or services that are sold and their individual cost.
- An estimation of the total costs and taxes.
- The due date for the payment and any other necessary mentions, like penalties for overdue payments.
There are many steps to every commercial transaction, and it’s better to set each one on paper, to avoid misunderstandings. When you don’t have enough information to issue a final invoice, you can send a proforma invoice with the estimated costs and delivery date.
Even for a less formal document, it’s still better to use a proforma invoice template, to make sure you include all the relevant sections. You can try the proforma invoice from CocoSign, and there are the other templates provided that might benefit your business.
Proforma Invoice FAQs
Can I make a payment on a proforma invoice?
No, proforma invoice forms are only used to send the client an estimation of the future costs; they shouldn’t use it to make any payment.
How to deliver a proforma invoice?
The delivery method depends on the client’s preferences. You can send the proforma invoice template in an email or using online invoicing software; if the client needs a hard copy, you can mail it or hand it to them directly.
What is the difference in format between an invoice and a proforma?
The sections are generally the same for both documents. However, the proforma needs to be clearly named so that it doesn’t create any misunderstandings. Iit should clearly say ‘proforma’ on top of the page.
Can the details change from the proforma to the final invoice?
The sellers are usually doing their best to make the estimation in the proforma invoice as accurate as possible, but sometimes changes do happen. Shipping costs and taxes are the ones that sometimes can change.
What is the difference between a proforma invoice and a quote?
You send a proforma invoice when you have already verbally agreed on a purchase but don’t have all the necessary details to issue a formal invoice. The quote, on the other hand, is sent to a client who wants more information before deciding on the purchase.