Published: 07 September 2026
A proforma invoice is a document that needs to be sent before the sale is done. It mostly use to show estimate price, payment terms, details of products and other important information need to be known.
Understanding what is a proforma invoice would help businesses to avoid confusion and handle the process easier.
A proforma invoice is not normally treated as the final accounting document for a sale. Instead, it acts as a formal quotation that gives the buyer a clear picture of what the final transaction is expected to include.
What is a Proforma Invoice?
The simplest definition of proforma invoice is a preliminary sales document that outlines the expected details of a future transaction.
It is generally issued before goods are delivered or services are completed.
The meaning proforma invoice is therefore different from a standard sales invoice. A regular invoice normally confirms an actual amount owed after a sale has taken place, while a proforma invoice describes what the buyer is expected to pay if the transaction proceeds under the stated conditions.
A proforma invoice should show product quantities, prices, payment terms, shipping costs, delivery details and other product related details.
Purpose of a Proforma Invoice
The purpose of a proforma invoice is to show the terms and details about the sale before the final invoice is ready and issued.
Businesses generally use it to give a price to buyer, confirm the order value or request advance payment from their clients.
It helps buyers and sellers check the details before the transaction is final.
When to Use a Proforma Invoice?
A business may use a proforma invoice when the buyer needs detailed information before the final sale.
It is often used when:
- Quantities are not final
- Shipping costs are estimated
- Advance payment is required
- The buyer needs approval
- Customs needs transaction details
Its use may vary depending on the industry and country.
What Information Must Be Included in a Proforma Invoice?
There is no universal format of a proforma invoice that applies in every country or industry. However, most proforma invoices contain similar commercial information.
A typical document should clearly state that it is a “Proforma Invoice” so that it cannot easily be confused with the final sales invoice.
It commonly includes:
- Seller’s business name and address
- Buyer’s name and address
- Date of issue
- Description of goods or services
- Quantity of each item
- Unit price
- Currency
- Discounts, if applicable
- Estimated taxes or VAT
- Shipping or delivery charges
- Total expected amount
- Payment terms
- Delivery terms
- Expected delivery date
- Validity period of the offer
International transactions may also include information such as Incoterms, country of origin, product codes, package details or shipping information.
The exact content should reflect the purpose of the document and any local regulatory requirements.
How to Create a Proforma Invoice?
To create a proforma invoice, start by adding your business and customer details, then clearly label the document as a “Proforma Invoice.” Include the issue date, a description of the goods or services, quantities, unit prices, estimated taxes, shipping costs and the total amount. You should also specify payment and delivery terms where applicable. Once the buyer approves the details and the transaction is confirmed, a final invoice can be issued.
Proforma Invoice Example
A basic proforma invoice example might look like this:
Seller: ABC Technology Ltd.
Buyer: Global Retail GmbH
Document: Proforma Invoice
Date: 10 August 2026
Product: Business tablets
Quantity: 10
Unit price: €500
Subtotal: €5,000
Shipping: €200
Estimated VAT: €1,040
Estimated total: €6,240
Payment terms: 50% advance payment
Estimated delivery: 14 business days
This document gives the customer a clear estimate of the transaction before the seller creates the final invoice.
Proforma Invoices vs. Other Types of Invoices
Although proforma invoices look similar to other commercial documents, their purpose is different.
Proforma Invoices vs. Regular Invoices
A regular invoice is generally issued to request or record payment for an actual sale.
A proforma invoice is issued before the transaction is fully completed.
In accounting terms, a regular invoice may create an accounts receivable entry and form part of the company’s financial records. A proforma invoice generally does not have the same accounting status because it represents a proposed rather than final transaction.
This distinction is important for tax reporting and bookkeeping.
Proforma Invoices vs. Commercial Invoices
A commercial invoice can be used for international sales and helps customs calculate import requirements. A proforma invoice includes all details about the sale but required documents may vary by country and type of goods.
Proforma Invoices and E-Invoicing
As businesses move toward digital financial systems, invoicing processes are becoming more automated.
E-invoicing allows invoice information to be created, transmitted and processed electronically in a structured format rather than relying only on paper documents or PDFs.
The benefits of e-invoicing can include faster processing, fewer manual errors, better record keeping and easier reconciliation between accounting systems.
However, a proforma invoice should not automatically be treated as the same thing as a legally recognised electronic tax invoice.
This is particularly important for companies dealing with e-invoicing in Europe, where digital invoicing and reporting requirements continue to expand and may differ significantly between countries.
Businesses operating internationally may also encounter related digital compliance systems such as SAF-T, which is used in some jurisdictions for structured accounting data reporting, and e-waybill systems used to record the transportation or movement of goods.
Together, these tools are changing the way businesses manage invoices, tax records and transaction data.
FAQs About Proforma Invoices
Is a Proforma Invoice Legally Binding?
A proforma invoice is usually not a final legal sales invoice. It shows proposed sale terms before the transaction is completed.
However, contracts, purchase orders, payment terms, and local laws may affect its legal status.
Does a Proforma Invoice Require an Invoice Number?
A proforma invoice can have its own reference number to make tracking easier.
However, businesses should normally keep proforma numbering separate from the sequence used for official tax invoices.
Is a Proforma Invoice Mandatory?
In most everyday business transactions, issuing a proforma invoice is not automatically mandatory.
Businesses typically use one when it is commercially useful or when a buyer, bank, customs authority or other organisation requests it.
Should a Proforma Invoice Include VAT?
A proforma invoice may include estimated VAT, but it is usually not an official VAT invoice.
The final tax treatment depends on local rules and the final invoice. Using a clear format of a proforma invoice can help businesses manage international sales, advance payments, and complex orders more easily.
