Download and print this PDF of the Proforma Invoice form for use with your exports.
What Is a Proforma Invoice?
An international sale often begins with a letter of inquiry from a potential buyer expressing interest in one or more of your products, outlining the terms of their interest, and asking for an informal or formal quote.
The buyer may request the quote in the form of a proforma invoice in order to arrange a letter of credit to pay for the goods or if they need to arrange financing for the purchase. In addition, certain countries may require a proforma invoice if they tightly control their currency exchange rate, require an import permit, or protect local industry by placing import quotas on certain types of goods.
If done correctly and an order results, the final commercial invoice you generate will closely resemble the proforma invoice. That means that all costs included in the quotation are firm and are not allowed to vary more than a letter of credit allows, if that is how the payment is arranged.
All proforma invoices should be valid for a specific time period. Keep in mind that material and manufacturing prices can rise, inland and international transportation fees can change, and currency exchange rates can fluctuate. Depending on the international trade term (typically one of the Incoterms® 2020 terms) you agree upon with the buyer, you may be responsible for these and other costs.
The Importance of the Proforma Invoice
- It serves as a negotiating tool between you and your international customer. Ideally, you want the proforma invoice to be as close to the commercial invoice as possible.
- It is a voluntary document, and it is the preferred method in the exporting business. It’s good form to include a proforma invoice whether or not it is requested.
- It is a blueprint for the entire export process. When it’s correctly completed, it contains several key pieces of information that will be used on many of the export forms, including a final export invoice, you'll need to create later.
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Proforma Invoice FAQs
What is the difference between an invoice and a proforma invoice?
An international sale often begins with a letter of inquiry from a potential buyer expressing interest in one or more of your products, asking for an informal or formal quote. A buyer may request a quote in the form of a proforma invoice. A regular invoice, also known as a standard invoice or sales invoice, is typically used in domestic transactions and is issued by a seller to a buyer to request payment for goods or services rendered.
Why is it called a proforma invoice?
Proforma means preliminary or provisional. The purpose of a proforma invoice is to provide the buyer with an estimated overview of the costs and terms of a potential transaction. It allows the buyer to review and confirm the details before committing to the purchase, so it is a preliminary invoice, preceding the more formal commercial invoice.
Should you pay on a proforma invoice?
Typically you do not pay on a proforma invoice because it is used as a preliminary invoice to quote the price of goods. However, a buyer may need it to arrange a letter of credit to pay for the goods or if they need to arrange financing for the purchase.
Who writes a proforma invoice?
The seller prepares and sends the proforma invoice to the potential buyer.
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