AIAZHWhat Is a Proforma Invoice?
A proforma invoice is a preliminary document sent by a seller to a buyer before goods or services are delivered. It outlines the expected costs, quantities, and terms of a sale. Unlike a regular invoice, it is not a request for payment. Think of it as a detailed estimate that helps both parties agree on the deal before finalizing.
What to Include in a Proforma Invoice
Every proforma invoice should be clearly labeled as Proforma Invoice at the top. Include your business details and the buyer's information, a unique reference number, an itemized list of goods or services with quantities and prices, shipping costs, applicable taxes, payment terms, delivery details, and a validity period.
Proforma Invoice vs Regular Invoice vs Commercial Invoice
A proforma invoice is a non-binding estimate sent before the sale. A regular invoice is a legally binding payment request sent after delivery. A commercial invoice is used for international shipments and customs clearance. Understanding these differences helps you choose the right document for each transaction stage.
When to Use a Proforma Invoice
Businesses use proforma invoices for international trade where customs requires cost details before clearance. They are also useful for custom orders, pre-sale negotiations, and when buyers need documentation for budget approval or financing. Sending a proforma invoice sets clear expectations and reduces dispute risk.
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