What Is a Pro Forma Invoice?

A pro forma invoice is a written confirmation of an order, sent by a seller to a buyer before delivering ordered goods or with the delivery. It is not actually an invoice or a bill. It is a preliminary bill of sale with a description of the order and an esti♐mate of its delivery price.

The information included on a pro forma invoice typically includes a description of th♊e goods purchased, ♒their price, their shipping weight, and an estimate of transport charges and other fees.

Understanding Pro Forma Invoices

A pro forma invoice reiterates the terms of a sale. It prevents misunderstandings between a buyer and a seller. It also includes a good-faith estimate of transit charges, which are subject to changes that may not be in the seller's control.

Businesses in virtually all industries use pro forma invoices to satisfy their internal purchase approval process. They streamline the sales process by🐼 stating the final t💃erms clearly, limiting the need for many follow-up calls.

T♐he pro forma invoice includes any information that Customs officials at bord༺ers need to determine any tariffs that are due.

A pro forma invoice notifies the buyer of the sale price, estimates any additiღonal costs such as taxes, and estimates shipping weight and costs.

A company may send a pro forma invoice before shipping any agreed-upon 澳洲幸运5官方开奖结果体彩网:deliverables or with the shipped items. It contains cost details asso𓆉ciated with the sale but is not an official demand for payment.

There are no firm guidelines on the format of a pro forma invoice, and it may or may not resemble a commercial invoice.

Purpose of a Pro Forma Invoice

A pro forma invoice💖 is used by a seller to communicate to a buyer the expected costs, fees, and date of delivery for an order. This transparency can help the manufacturer avoid any misunderstandings when the order is delivered.

A pro forma invoice may also provide the buyer with an opportunity to negotiate the terms before delivery. A buyer who is not satisfiඣed with the price, quantity, or 🧸delivery timeline can contact the manufacturer to renegotiate.

Pro forma invoices aren't legally required but they're generally a good idea because they can prevent disputes at the time of delivery.

Pro Forma Information

For International Shipments

Specific documentation is required before goods can pass through Customs into the U.S.

A traditional commercial invoice must list the buyer, the seller, and the carrier, and describe the goods, their quantity, the value of the shipment, the method of payment, and more.

A pro forma invoice isn't needed for international shipments but is often used when a transaction that isn't final requires an estimate of the cost of products being bought. It should include enough information to allow Customs officials to determine the duties needed from a general examination of the included goods. This information can include:

• Estimated price
• Product description and quality
• Product quantity
• Payment method
• Expected delivery time

If a firm uses a pro forma invoice for Customs, it must also present a commercial invoice within 120 days.

For Other Transactions

A pro forma invoice should include all the details of a transaction, even if certain figures aren't yet final, so that nothing comes as a surprise to the buyer. Depending on the type of business, a pro forma invoice can include:

• The terms "Pro Forma Invoice" and "Not an Invoice"
• Transaction date
• Product description
• Quantity
• Selling price
• Delivery date
• Handling fees
• Shipping costs
• Any customer or seller specifications

Pro Forma Invoice vs. Final Invoice

While a pro forma invoic❀e represents ওa preliminary notification of the terms of a purchase agreement, a formal or final invoice is an official commercial instrument that informs the receiving party of their payment obligation.

A formal invoice is usually issued at the time of delivery or immediately after and constitutes a request for payment by th🍃e receiving party.

Pro Forma Invoice Example

A company may use a pro forma invoice if th🐼e terms of the sales contract specify that full payment is not due until the buyer receives certain goods. 

For example, a bakery customer might agree to the price of a cake on a pro forma invoice, and the baker will deliver the cake once it is ready. The customer will then pay for it when they receive the final formal invoice. The final invoice amounꦺt should be the same or close to the amount on the pro forma invoice.

The Bottom Line

A pro forma invoice is a preliminary document that outlines the terms of sale when an order is placed. Although it is not final, a pro forma invoice should give the buyer a clear understanding of the terms of sale including the price, date of delivery, and any additional fees. It is less official than a formal final invoice, which follows at the time of delivery or shortly thereafter.