Free Proforma Invoice Template for Excel

A proforma invoice helps declare the trade’s value to customs authorities and can be used to secure a letter of credit. Before shaking hands on a deal, businesses often negotiate about the terms of the deal such as the selling price, discounts, and delivery dates. Once this negotiation is over, it is good practice for the business to send a preliminary draft of the invoice to the buyer showing the agreed-upon deliverables. This document also acts as a tentative agreement and is called the proforma invoice. When shipping internationally, you must provide a detailed summary of the goods inside.

1. Proforma invoices can be sent out just like your other invoicing documents.
2. The date on this invoice is the taxable date and will be used for VAT filing.
3. Close crucial deals, improve cash flow, and get paid faster with FreshBooks.
4. Understanding the differences between invoices will help you create an efficient accounts payable workflow and avoid costly mistakes, like paying an invoice twice or violating regulations.
5. Pro forma invoices often come into play with international transactions, especially for customs purposes relating to duties on imports.

As you can see, this template includes a “Proforma Invoice” label, the date of issue, contact details for both the buyer and the seller, details of the service to be provided, and the prices. A quote is sent to a potential customer who has expressed interest in buying from your business. It’s considerably less formal than a proforma invoice and is usually sent during the early stages of the sale when the customer initially enquires about your prices. They also don’t have a unique, sequential invoice number, which is required on all standard invoices. Proforma invoices must also clearly include a “Proforma” label, so as not to get confused with other sales documents.

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Use the tips below and the info to the right of the form for help with specific sections. This is a common form used in both domestic and international trade, where additional shipping details and the currency need to be defined, as well as details required for customs. If you are doing business domestically, you might want to try one of our other invoice templates. Proforma invoices are typically used for export sales when a commercial invoice is not yet available—or in other words, when the seller still has to pay for the goods. Customs requires that the proforma invoice contains adequate information for examining the goods and assessing duties.

But it’s both easier and safer to have it resemble the structure of the finalised invoices you create. Create professional proforma invoices for free with SumUp Invoices and convert them into full invoices with one click. Compliant and easy to use, you’ll complete your first proforma invoice in under 1 minute. Here’s a quick introduction to proforma invoices and how to use them in your business. The difference is that a pro forma invoice is sent before goods have been ordered, and a credit memo is issued post-delivery of damaged goods.

What’s the Difference Between a Proforma Invoice and a Purchase Order?

It’s given to a committed buyer ahead of time, ensuring the buyer and seller are both on the same page about the agreement. There are similarities between proforma and commercial invoices, but each works differently. For instance, proforma invoices aren’t used for accounting purposes by any party. This is because a proforma isn’t a demand or request for payment but a type of quote. Most pro forma invoices provide the buyer with a product description, selling price, and an estimate of any commissions or fees. Although the pro forma invoice may be subject to change, it provides all transaction details so that no charges come as a surprise once the transaction is final.

When Does the Seller Issue a Proforma Invoice?

On the other hand, a https://1investing.in/ is simply an estimate of what the final invoice will look like. It is sent before the delivery of goods or services and is not a legal demand for payment. Instead, it’s used as a preliminary document to declare the value of the trade, especially in international trade.

If you’re using accounting software, ask your provider how to send a pro forma invoice. You don’t want to accidentally send a sales invoice, as that will record the sale as income if your business uses accrual accounting. A proforma invoice is a bill of sale that is sent to a customer before goods and services are delivered by your business. It will usually contain details such as a description of the items being sold, their price and the total amount payable, along with any taxes and fees incurred. That gives the customer as precise an estimate as possible of the expected cost of an order.

It details the expected cost of goods or services, but it doesn’t represent a completed sale or an obligation to pay. Hence, changes or cancellations can be made without any legal consequences. However, once the final invoice is issued and agreed upon, it becomes legally binding, and the buyer is obligated to pay as per the terms mentioned in the invoice. A draft invoice and a proforma invoice serve as preliminary documents in a sales transaction, but their purposes differ. It is often used for review and approval within a business before it is sent to the customer. On the other hand, a proforma invoice is sent to the buyer before the goods or services have been delivered, serving as an estimate or quotation, and is not legally binding.

Including a proforma invoice with your shipment makes international trade and imports as hassle-free as possible. It’ll also speed up the approval process and make sure you deliver to your customer on time. If your manufacturing company receives a large order, sending a proforma is a good idea. By including information on the product, quantity, cost, delivery date, and any other details of the sale, you’ll ensure your client is aware of all terms of service.

At the bottom of the document, enter the number of days the client has to pay the invoice in full. Then, in the comments box, enter any notes or info the seller has for the buyer. This can include a thank-you to the buyer or an address for them to send the invoice payment. A pro forma invoice also provides the buyer with an opportunity to negotiate the terms before delivery. For example, if the buyer is not satisfied with the price, quantity, or delivery timeline, they can contact the manufacturer to reach a mutually-satisfactory conclusion. A pro forma invoice is different from a simple price quotation in that it lays out the terms of a transaction.

Either you want to declare an estimate of the final cost of the item(s) or service(s) you’re providing, or you want to ship internationally. You may be familiar with the term ‘proforma invoice’, especially if you’re a business owner already adept in the world of invoices. But for those still scratching your heads, a proforma invoice is a preliminary bill of sale that is sent to a customer before the final details of the sale are confirmed (e.g. quantity or materials). Companies looking for ways to grow rapidly and improve their billing process should consider using Proforma Invoices. Proforma invoices are a type of preliminary summary of the transaction before confirming the sale. The main objective of sending the proforma invoice to the buyer is to streamline the quote-to-cash process and allow the buyer to review the terms and conditions before the transaction is closed.

What should a proforma invoice look like?

The purpose of the Proforma Invoice is to show the cost of a product or service that helps customers decide whether to continue their purchase. A purchase order (PO) is a commercial document confirming the purchase of goods. A purchase order is legally binding, as the terms are final and cannot be negotiated.

In many ways, a proforma invoice has more in common with an estimate than a commercial invoice. Estimates and proforma invoices are both used at similar points in the sales process and provide your customer with information about their transaction. However, there are also crucial differences between a proforma invoice and an estimate. Since proforma invoices are not final sales invoices, they cannot be used for tax purposes or treated as VAT/GST invoices. This is because it doesn’t fit the “tax point”, which is the time of supply.

Once you’ve completed the work for your client or sent the products to your customers, it’s time to think about getting paid. This is when you would use what’s known as a commercial invoice, a complete bill with payment details and a due date. Freelancers will sometimes use a proforma invoice instead of a quote or estimate because they can easily use the same format to submit a final invoice for payment. This saves the freelancer time and keeps things consistent for the client. Construction business owners and managers can use pro forma invoices to detail materials, labor, time, and more. The benefit is that everyone knows the cost of the project upfront, and there is no confusion once the final invoice is due.

Proforma Invoice (Version 3) – Includes fields for VAT and other international shipping fields. FedEx Proforma Invoice – Used by companies for shipping their products via the shipper FedEx. A form needs to be individually printed-out and inserted into each shipped package (cannot use 1 for multiple). Pro forma means “for the sake of form.” It’s used to announce that the information within a document is based on projections and isn’t final.

Pro forma in Latin stands for ‘for the sake of form,’ implying that it is only a provisional document and will eventually be followed up with an official document. Although proforma invoices are widely used, it is easy to confuse them with regular invoices. This article aims to explain the meaning of proforma invoices using examples, demonstrate their uses, and demystify the differences between a proforma invoice and an invoice. Most business owners and managers understand how challenging it is to balance invoices, estimates, proposals, and more. While the benefits of using proforma invoices are undeniable, it might seem overwhelming to manage the delivery and filing of yet another type of document.

A proforma should include the work to be completed or goods to be provided, along with the quantity of each and the price you’ll be charging for them. A pro forma invoice looks like a regular invoice but must be labeled ‘pro forma invoice’. It includes all the usual invoice information such as details of the buyer and seller, a list of products and prices, and terms of the sale. It should also include a reference number so it’s easy for customers to save and retrieve, but this isn’t an official invoice number.