Last updated: October 15, 2026
A proforma invoice is a preliminary bill sent before goods are shipped or work is completed. It looks like an invoice and lists the same details — items, quantities, prices, totals — but it is not a demand for payment and does not count as an accounting record. Think of it as a formal, good-faith quote: "here is exactly what you would pay if you go ahead." This guide explains when to use a proforma invoice, how it differs from a commercial invoice, and what to include.
The word "proforma" comes from Latin, meaning "as a matter of form." A proforma invoice is issued as a matter of form — to document the terms of a potential sale before it happens. It commits the seller to the quoted prices for a stated period and gives the buyer something concrete to approve, budget for, or take to their bank. Because no payment is due and no sale has occurred, it is not entered into accounting books the way a real invoice is. Small businesses encounter proforma invoices most often in two situations: ordering inventory or equipment from overseas suppliers, and quoting large custom projects where the client needs formal documentation to release a deposit. In both cases, the proforma protects both sides by putting the full terms in writing before money moves.
The two documents look alike, which is exactly why the distinction matters. This table sums it up:
| Feature | Proforma invoice | Commercial invoice |
|---|---|---|
| Purpose | Quote / declaration of intent | Demand for payment |
| When issued | Before the sale is finalized | After goods ship or work is done |
| Payment due? | No | Yes, per the payment terms |
| Accounting record? | No — not booked as a receivable | Yes — booked as accounts receivable |
| Can it be revised? | Yes, freely, until agreed | Only via credit note or new invoice |
| Used in customs? | Often, for valuation and permits | Usually the final customs document |
Label the document clearly at the top — "PROFORMA INVOICE" in large type — so no one mistakes it for a bill. A bold label plus a separate numbering sequence is what keeps the quote unmistakable at a glance. Number it in a separate sequence from your real invoices to avoid confusion in your records.
Include everything the final invoice would show, so the buyer can make a decision on complete information. A complete proforma leaves nothing for the buyer to guess — every figure they need to approve the deal should be on the page:
The biggest mistake is treating a proforma invoice as a real one — recording it as revenue or chasing payment on it. It is a quote, not a bill. The second is forgetting an expiry date: prices for materials and freight move, so state how long your quote holds (30 days is typical). A third is numbering proformas in the same sequence as real invoices, which creates gaps and confusion in your books. Give proformas their own prefix, such as PF-2026-001, so the two sequences never mingle. Finally, when the deal is confirmed, always follow through with a proper commercial invoice; the proforma alone does not create an enforceable payment obligation or a complete paper trail.
Generally no. A proforma invoice is a quote, not a contract or a demand for payment, so it does not by itself create a payment obligation. It becomes meaningful once the buyer accepts it and the parties proceed — at which point the terms usually carry into a contract or purchase order. If you need enforceable terms, put them in a signed agreement.
No. Because a proforma invoice is not a sale, it does not trigger tax reporting or create a receivable. Taxes are accounted for when the actual commercial invoice is issued and the transaction occurs. Keep proformas out of your accounting books and numbered separately from real invoices.
Yes — this is one of its most common uses. Customs authorities in many countries accept proforma invoices for valuing shipments, issuing import permits, and arranging letters of credit before the goods arrive. The final commercial invoice typically accompanies the actual shipment.
Issue the commercial invoice once the sale is confirmed — when goods ship, work is completed, or the agreed advance payment is due, depending on your terms. Reference the proforma number on the commercial invoice so the buyer can match the two documents.
Yes, freely. Since a proforma invoice is not a booked transaction, you can reissue it with corrected items, quantities, or prices as negotiations continue. Just keep the numbering clear — for example, PF-2026-001 rev 2 — so old versions are never confused with the agreed one, and always confirm the buyer is working from the latest copy.
Related guides
FreeSlip guides are for general information only — verify amounts, tax treatment, and legal requirements with your accountant or tax professional.