A proforma invoice looks like an invoice, reads like an invoice, and carries the same line items and totals as an invoice — but it is not an invoice. It is a preliminary document: a good-faith statement of what a sale would cost, sent before the sale is final. It is most often used in international trade, where a buyer needs to know the value of goods before they are shipped, and where customs officials need a declared value to clear them.
This guide explains what a proforma invoice is, how it differs from a commercial or tax invoice, when exporters use one, and what it must and must not claim.
What a proforma invoice is
A proforma invoice is a document a seller sends to a buyer before a sale is completed, setting out the goods or services, the quantities, the prices, and the total — as if the sale had already happened. The word “proforma” means “as a matter of form”: the document follows the form of an invoice without being one.
Proforma vs commercial invoice
A commercial invoice is the real invoice. It is issued when the goods are shipped or the service is delivered, it demands payment, and it is the document used for accounting and tax. A proforma invoice does none of those things: it does not demand payment, it is not entered as a sale in the accounts, and it is not the document a buyer uses to claim tax back.
The two documents can look almost identical, but their status is different. A commercial invoice says “you owe this.” A proforma invoice says “this is what you would owe.” That difference must be obvious on the face of the document: a proforma invoice should be clearly headed “Proforma Invoice” and marked as not a tax invoice.
Proforma vs tax invoice
A tax invoice is a commercial invoice that meets a tax authority’s requirements — it carries the seller’s tax registration number, the tax rate, and the tax amount as a separate line, and it is the document a registered buyer uses to claim tax back. A proforma invoice must never be presented as a tax invoice. It has no tax status, and using it as one can create problems for both the buyer and the seller.
When exporters use a proforma invoice
Exporters use proforma invoices in several common situations. A buyer overseas asks for a written quotation before committing — the proforma is that quotation, in invoice form. A buyer needs to apply for an import licence or foreign exchange approval, and the authorities require a document showing the value of the goods. A shipment needs to clear customs, and the declaration needs a declared value — the proforma supplies it.
Proforma invoices are also used when goods are sent for a reason other than a sale: samples, goods sent for repair, goods on consignment, or goods for exhibition. There is no sale at all, and a commercial invoice would be wrong — but customs still needs to know what the goods are worth, and the proforma provides that figure.
To be useful for international trade, a proforma invoice should include the details customs and banks look for: the exporter and the consignee, the country of origin, a description of the goods, the quantities and unit prices, the total value, the currency, the shipping method, and the delivery terms (Incoterms, such as FOB or CIF). Without those details, a proforma may be sent back, delaying the shipment.
What a proforma invoice must and must not claim
A proforma invoice must state clearly that it is a proforma invoice, not a tax invoice. It must show the goods or services, the quantities, the prices, and the total, and it should state its validity period — how long the prices quoted will hold — so the buyer knows the offer has a deadline.
It must not demand payment, and it must not claim to be a tax document. It must not show a tax amount as if tax had been charged, unless the document is clear that the figure is an estimate for customs purposes only. And it must not be used to record a sale in the accounts: a proforma is a quotation, and the sale is recorded only when the commercial invoice is issued.
Worked example: a proforma invoice for an export shipment
Suppose an exporter is sending a shipment of handmade textiles to a buyer overseas. The proforma invoice shows:
- Textile scarves — 200 units × $25.00 = $5,000.00
- Shipping — $400.00
- Insurance — $150.00
Add the lines: $5,000.00 + $400.00 = $5,400.00; $5,400.00 + $150.00 = $5,550.00. The proforma total is $5,550.00. The document is headed “Proforma Invoice,” marked “Proforma — not a tax invoice,” and states that the prices are valid for 30 days. The buyer uses it to arrange payment and to declare the shipment value to customs. When the goods ship, the exporter issues the commercial invoice for the same $5,550.00, and that is the document the sale is settled on.
How to create a proforma invoice
Use the proforma invoice generator, which produces a document headed “Proforma Invoice” with the “not a tax invoice” marking built in. Enter the exporter and consignee details, the country of origin, the delivery terms, and the shipping method, then add your line items — the tool totals them and shows a live preview you can print or save as a PDF. If the buyer accepts and the sale goes ahead, use the invoice generator to issue the commercial invoice that follows.
Common mistakes to avoid
The most common mistake is sending a proforma invoice without marking it as one — the buyer treats it as a real invoice, and the confusion takes weeks to untangle. The second is using a proforma to demand payment, which it cannot do. The third is leaving out the trade details — country of origin, delivery terms, shipping method — that customs and banks need. And the fourth is recording a proforma as a sale in the accounts, which overstates income and creates a tax problem later.
Frequently asked questions
Is a proforma invoice legally binding?
Generally no. A proforma invoice is a quotation, not a contract, and it does not oblige the buyer to buy or the seller to sell. It becomes relevant only when the buyer accepts it and the parties agree terms — at which point the commercial invoice and any contract take over. If you need a binding commitment, use a contract or a purchase order.
Can I use a proforma invoice to claim tax back?
No. A proforma invoice has no tax status. To claim tax back on a purchase you need a proper tax invoice from the seller, issued when the sale takes place. A proforma cannot substitute for one.
When should I issue a commercial invoice instead of a proforma?
Issue a commercial invoice when the goods are shipped or the service is delivered and payment is due. Use a proforma before that point — to quote, to get approval, or to satisfy customs — and replace it once the sale is real.