Businesses often need a preliminary document that outlines the details of a transaction before issuing a final invoice. The proforma invoice provides an estimate of costs, including product descriptions, quantities, and terms of sale, helping both parties align their expectations.

It plays a crucial role in international trade, simplifying customs procedures and giving buyers a clear view of their financial commitments. While it includes essential details like pricing, delivery terms, and payment conditions, it does not demand immediate payment. Instead, it serves as a confirmation of intent, ensuring a smoother transaction process.

What is a proforma invoice ?

A proforma invoice is a preliminary bill or estimated invoice sent to a buyer in advance of a shipment or delivery of goods. It outlines the details of the transaction, including the description of goods, quantities, prices, and other terms of sale, but it is not a formal demand for payment. Here’s a breakdown of its purpose and key components:

Why should you use this document ?

-Estimate costs: provides the buyer with an estimate of the costs involved in the transaction.

-Customs clearance: often used for customs purposes to declare the value of goods being imported.

-Pre-shipment agreement: helps the buyer and seller agree on terms before the final invoice is issued.

-Funding or approval: may be used by the buyer to secure funding or internal approvals for the purchase.

Key components of a proforma invoice:

1. Seller and buyer information: name, address, and contact details of both parties.
2. Invoice number and date: unique identifier for the proforma invoice and the date it was issued.
3. Description of goods: detailed list of items, including quantities, weights, and specifications.
4. Price: unit price and total price for each item.
5. Terms of sale: incoterms (e.g., FOB, CIF, EXW) that define responsibilities for shipping and insurance.
6. Payment terms: due date, payment method, and any discounts or penalties.
7. Shipping details: mode of transport, delivery date, and destination.
8. Taxes and duties: any applicable taxes, duties, or fees.
9. Signature: authorized signature from the seller (if required).

Difference between proforma invoice and commercial invoice:

-Proforma invoice: An estimate or preliminary document, not legally binding.

-Commercial invoice: The final bill issued after the transaction, legally binding, and used for payment and customs clearance.

For more informations , Walvis is always here for you !