Proforma invoice: What it is and how to use one (2024)

A proforma invoice is a preliminary bill of sale. In this guide, we’ll take a look at why proforma invoices are important and when to use them.

Have you ever found yourself in a situation where the customer wants a confirmation of the sale before the product or service is delivered? That’s where a proforma invoice comes in.

A proforma invoice lists the products and services and costs. It looks like an invoice, but the document specifies that the goods or services haven’t been delivered yet. In short, it’s a confirmation that you intend to provide the goods or services.

In this guide, we’ll take a look at how and when to use proforma invoices.

What’s the difference between a regular invoice and a proforma invoice?

An invoice is sent is a legally binding document requesting payment for goods or services that have been delivered.

A proforma invoice is a preliminary document sent before the goods or services have been delivered, but the information on both invoices is the same: goods and services, pricing, delivery date and business information.

When do you use proforma invoices?

You issue proforma invoices at the initial stages of a transaction, usually when your client has committed to the purchase. Proforma invoices provide an overview of the transaction, and allows you or the client to make necessary adjustments before the goods and services are delivered and the actual invoice is issued.

You can create a proforma invoice to confirm the details with the client or the client can request it to verify the details or for their own records.

For example, if you run a catering business, you can issue a proforma invoice when the client schedules the catering to ensure that you both agree on the service to be delivered. The client pays you when you issue the actual invoice, after confirming that it matches with the proforma invoice.

Proforma invoice example

Here’s an example of what it could look like:

How to create a proforma invoice

It’s a straightforward process, similar to how you make regular invoices.

Many accounting or invoicing software give you the option to create proforma invoices or download a template. Alternatively, you can make your own template Microsoft Word, Google Docs or Excel.

Here’s a simple step-by-step guide to creating proforma invoices:

1. Create a professional template

Create your own a template, use invoicing software or download a template to create a polished invoice, tailored with your logo and branding. Clearly label the document as “Proforma”, to make it clear that the regular invoice will be issued later.

2. Add your company and contact details

Make sure to add your business information and contact details so it’s clear who the proforma invoice is from, and so your customer can contact you if they have any questions. Add your customer’s details, so it’s clear who it’s for.

3. Break down costs

Specify which services or products you will deliver and provide transparency by adding unit price, quantity and total costs. Remember tax, if applicable, as well as any discount you might want to offer.

4. Save and send the invoice

Proforma invoices can be sent in many ways, such as via email, or in the mail. You can even send it directly from your invoicing software. The quicker you send it, the quicker you and your customer can agree on the details and proceed with the sale.

What to include on a proforma invoice

Usually, it includes:

• The header “Proforma invoice”
• The buyer’s details, such as company name or name, billing and shipping addresses
• The seller’s details, your company name, address and contact information
• Payment terms
• Invoice creation date
• Invoice expiration date
• Description and prices for the goods or services

Pros and cons of using proforma invoices

The benefits:

• Clearly showing clients what you can offer them
• Demonstrating your commitment to the agreed prices and delivery dates
• The buyer acknowledges their intent to pay
• Streamlines the quote-to-cash process
• Can serve as a quote for internal purchase approval
• Reducing processing time and costs

The drawbacks:

• Not legally binding
• Potential confusion for buyers who are unfamiliar with proforma invoices
• You have to spend time creating the proforma invoices

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Frequently asked questions