Proforma Invoice
A proforma invoice is a preliminary document issued by the seller before shipment to outline the details of a proposed sale. It typically includes information such as the description of goods, quantities, estimated value, delivery terms, and payment conditions. Unlike a commercial invoice, it is not a demand for payment but an advance statement of what the seller intends to supply. This helps the buyer understand costs and terms before confirming the order.
Proforma invoices are often used for customs, import approvals, and foreign exchange purposes. Authorities may rely on them to assess duties, apply for licenses, or approve advance payments. Buyers may also use the proforma invoice to arrange financing or open a Letter of Credit. It serves as a reference point before the actual shipment takes place.
In trade operations, the proforma invoice helps align expectations between buyer and seller. It reduces misunderstandings by clearly defining product details and commercial terms in advance. Once the buyer agrees, the transaction proceeds, and the final commercial invoice is issued after shipment. Accuracy at this stage helps ensure smooth customs clearance later.
Overall, the proforma invoice plays a planning and confirmation role in international trade. It supports compliance, financial preparation, and transparent communication. While not legally binding for payment, it is a critical document in the early stages of a shipment.
Frequently Asked Questions about Proforma Invoice
Clear answers to the most common questions people have when learning about Proforma Invoice.
No. A proforma invoice is issued before shipment for reference, while a commercial invoice is issued after shipment and is used for billing and customs clearance.
They use it to assess estimated value, duties, licensing needs, or import approvals before the goods are shipped.
Yes, in some cases buyers make advance payments based on a proforma invoice, especially for new or high-value transactions.