A proforma invoice is a preliminary invoice sent before a sale is complete. It tells the buyer exactly what they will receive and what it will cost, in the same format as a real invoice, but it is not a demand for payment and is not usually recorded as a sale in your accounts. Think of it as a formal, detailed preview of the final invoice.
What a proforma invoice is (and is not)
"Pro forma" is Latin for "as a matter of form." The document looks like an invoice: it has your details, the buyer's details, line items, prices, and totals. The difference is its status.
- It is a good-faith commitment to sell the listed goods or services at the stated price and terms.
- It is not a tax invoice. In most countries you cannot use it to reclaim VAT or GST, and you should not record it as income.
- It is not legally a demand for payment, even though buyers sometimes pay against it, which is common when prepayment is required.
Because of this, a proforma should be clearly labeled "Proforma Invoice" at the top, so nobody mistakes it for a final bill.
When to use a proforma invoice
Prepayment before work or shipping
If you require payment before you start work or ship goods, a proforma gives the buyer a formal document to pay against. Once payment arrives and the goods ship, you issue the final invoice. This is common with new clients and custom orders.
Internal approvals
Many companies cannot release funds or raise a purchase order without a document showing the exact cost. A proforma lets your client's manager or finance team approve the spend before anything is final.
Customs and international trade
For cross-border shipments, a proforma is often used to declare the value of goods before the commercial invoice is ready, or for samples and goods that are not being sold. Buyers may also need one to apply for an import license, arrange financing, or open a letter of credit. Customs requirements vary by country, so confirm what your freight forwarder or the destination customs authority expects. Our guide to invoicing international clients covers currency and cross-border details.
Fixing terms before a complex order
When the order involves many items, shipping costs, or special terms, a proforma gets everything in writing before either side commits. It works much like a detailed quote, but in invoice format.
Proforma vs commercial vs final invoice
| Proforma invoice | Commercial invoice | Final (tax) invoice | |
|---|---|---|---|
| When sent | Before the sale is confirmed | When goods ship internationally | After delivery or on agreed date |
| Purpose | Preview, approval, prepayment | Customs clearance and duties | Request payment and record sale |
| Demand for payment | No (though prepayment may be made) | Usually also serves as the bill | Yes |
| Recorded as revenue | No | Yes | Yes |
| Can reclaim tax with it | Generally no | Depends on country | Yes, if properly issued |
| Numbering | Separate sequence recommended | Regular invoice sequence | Regular invoice sequence |
In domestic sales, the "commercial invoice" and the "final invoice" are effectively the same document. The term commercial invoice is used mostly in international shipping, where it must meet customs requirements.
What to include on a proforma invoice
A proforma should contain nearly everything a final invoice does, so the buyer can make decisions based on it:
- The heading "Proforma Invoice"
- A proforma reference number, kept separate from your regular invoice numbers (for example PF-0012)
- Issue date and a validity date, such as "Valid until November 1, 2026"
- Your business name, address, contact details, and tax ID if you have one
- The buyer's name, address, and any PO number
- Detailed descriptions of goods or services, with quantities and unit prices
- Taxes, shipping, insurance, and any other charges expected
- The estimated total and currency
- Payment terms, such as "100% prepayment by bank transfer"
- For goods shipped abroad: country of origin, weights, dimensions, and shipping terms
Tip: Use a separate numbering sequence for proformas, such as PF-0001. That way your regular invoice numbers stay unbroken, which many tax authorities expect. See our invoice numbering guide for more.
From proforma to final invoice
Once the buyer accepts the proforma and the sale goes ahead, issue a proper invoice:
- Give it a number from your regular invoice sequence.
- Reference the proforma number so the buyer can match them.
- Update anything that changed, such as final shipping costs or quantities.
- If the buyer prepaid against the proforma, show the payment received and a balance of $0.00, or the remaining balance if they paid only part.
If you take a partial prepayment, it may be clearer to issue a deposit invoice instead, since that is a real invoice that records the payment properly.
Example note for a proforma
This is a proforma invoice and is not a demand for payment or a tax invoice. Prices are valid until November 1, 2026. A final invoice will be issued upon shipment. To confirm this order, please arrange prepayment of $4,250.00 USD by bank transfer using reference PF-0012.
When you are ready to issue the final bill, create it in our free invoice generator and add the proforma reference in the notes field.
Frequently asked questions
Is a proforma invoice legally binding?
It is generally treated as a good-faith commitment to the stated price and terms rather than a binding demand for payment. Whether it creates a contract depends on your local law and what the buyer and seller agree. If large sums are involved, ask a lawyer or your accountant.
Can a buyer pay a proforma invoice?
Yes, and it is common when prepayment is required. After the money arrives, you should still issue a final invoice that records the sale and shows the payment received.
Do I record a proforma invoice in my accounts?
Usually not. A proforma is not a completed sale, so it is not recorded as revenue or a receivable. The final invoice is the document that goes into your books.
Keep reading
- How to Invoice International Clients: Currency, VAT, Payments and FormattingA practical guide to billing clients in other countries: choosing a currency, handling exchange rates and fees, VAT and reverse charge basics, and formatting invoices clearly.
- Invoice vs Quote vs Estimate: What's the Difference?Estimates, quotes, and invoices happen at different stages of a job. Learn which ones are binding and how to turn an accepted quote into an invoice.
- How to Invoice for a Deposit (and Show It on the Final Invoice)Learn how to bill a deposit before work starts, deduct it cleanly on the final invoice, and write clear refundable or non-refundable deposit terms.