Proforma invoice
A proforma invoice is a preliminary bill that shows expected costs before goods or services are delivered.
A proforma invoice is a draft-style bill you send before the deal is finalized. It looks like a regular invoice and shows the expected items, prices, and total, but it isn't a demand for payment and doesn't go in your books as a sale yet. Buyers often use it to arrange budgets, payments, or shipping paperwork before committing.
What it means
A proforma invoice is a good-faith preview of what the final invoice will look like. It confirms the agreed goods or services and their prices so the buyer knows exactly what to expect before delivery.
Unlike a real invoice, a proforma invoice usually doesn't carry an official invoice number for accounting, isn't recorded as revenue, and can't be used to reclaim tax. Once the goods ship or the work is done, you replace it with a proper invoice.
When it's used
Proforma invoices show up most often in specific situations.
- International shipping, where customs needs a value declaration
- When a buyer needs the figures approved before paying or releasing a budget
- Advance-payment or deposit arrangements before work begins
- Confirming final details with a client before a sale is official
Example
An exporter sends a proforma invoice for a $5,000 order so the overseas buyer can arrange a bank transfer and clear customs. After payment is confirmed and the goods ship, the exporter issues a final, numbered invoice for the same amount, and that one is the official accounting record.
Frequently asked questions
Can a client pay against a proforma invoice?
A buyer can use a proforma invoice to arrange or send payment, but it isn't an official demand for payment or a tax document. You should still issue a final, numbered invoice once the goods or services are delivered.
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