GLOSSARY

Pro Forma Invoice

Pro Forma Invoice is an invoice provided by a supplier prior to the shipment of merchandise, informing the buyer of the kinds and quantities of goods to be sent, their value, and specifications (weight, size, etc.).

What is Pro Forma Invoice?

A Pro Forma Invoice is a preliminary bill of sale sent to buyers in advance of a shipment or delivery of goods. It will typically describe the purchased items and other important information, such as the shipping weight and transport charges.

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Key Takeaways

1、Pro Forma Invoices are sent to buyers ahead of a shipment or delivery of goods or services.

2、Most Pro Forma Invoices provide the buyer with a precise sale price.

3、No guidelines dictate the exact presentation or format of a Pro Forma Invoice

4、A Pro Forma Invoice requires only enough information to allow customs to determine the duties needed from a general examination of the included goods.

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A Pro Forma Invoice is a preliminary bill of sale sent to buyers or clients in advance of a shipment or delivery of goods. It is a commitment to goods or services that have yet to be delivered. A Pro Forma Invoice includes a description of the goods and other details about the transaction. Also, it lists the price that a buyer is charging for the products or services.

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Why Use a Pro Forma Invoice?

A Pro Forma Invoice is used to communicate the expected costs, fees, and date of delivery for an order or product. Although it is not final, it represents a good-faith estimate of the costs that the buying party should expect to pay.

A Pro Forma Invoice provides the buyer with an opportunity to negotiate on the terms of delivery. If the buyer is not satisfied with the price, quantity, or delivery timeline, they can contact the manufacturer to reach a mutually-satisfactory conclusion. Although there is no legal requirement to issue a pro forma invoice, this is generally a good idea because it allows manufacturers to avoid disputes at the time of delivery.

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What are the differences between Pro Forma Invoice and Commercial Invoice?

1、Proforma Invoice is issued as proof of commitment to the sale of a product or service, while Commercial Invoice is considered a business document while maintaining books of accounts.

2、Proforma Invoice is issued before the goods or service is delivered by the seller, Commercial Invoice is issued before the buyer makes the payment.

3、A Pro Forma Invoice only includes the total amount, it doesn’t demand payment from the buyer, the essentials of Commercial Invoice include mode of payment, payment due date, and other payment terms.

4、A Pro Forma Invoice doesn’t serve any purpose during the company audit, but Commercial Invoice serves as an important document during the company audit.

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A Pro Forma Invoice is a preliminary document that outlines the terms of sale when an order is placed. Although it is not final, a Pro Forma Invoice should give the buyer a clear understanding of the terms of sale, including the price, date of delivery, and any additional fees. However, they are less official than a formal invoice, which is typically issued at the time of delivery.

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Related Terms:

Commercial Invoice