In the world of invoicing, the "Proforma" is a unique document. It sits somewhere between a Quotation and a Commercial Invoice. Using it correctly can speed up customs clearance and secure upfront payments.
Proforma Invoice Definition
A Proforma Invoice is a preliminary bill of sale. It is sent to a buyer before the goods are shipped or delivered.
Unlike a standard invoice, a Proforma Invoice is not a legal demand for payment (and therefore, you don't use it for accounting/tax purposes yet). It creates a "good faith" agreement on the price and quantity.
When to Use It
- International Trade (Customs): Customs agents often require a Proforma Invoice to calculate duties and taxes before the goods arrive.
- Securing Financing: A buyer might need a Proforma Invoice to show their bank to get a Letter of Credit to pay you.
- Advance Payments: If you require a deposit before starting work, you send a Proforma Invoice to request that payment.