Accounting terms

Dictionary of all accounting terms

What is a Proforma Invoice?

A proforma invoice is a document that is either sent with goods shipped internationally to determine their value or sent as a commitment by a supplier to deliver goods to the customer.

The proforma invoice is normally used in two ways, and they are popular documents for both purposes.

Proforma invoice for shipping

The proforma invoice can be used to abide goods that are being shipped internationally. They are used by customs agents to determine the value of the goods being shipped. Although the document is useful, it is not a completed document and therefore does not list any VAT or taxes.

Proforma invoices can be substituted by commercial invoices, although the latter is more preferred as it is a completed document. Both documents are not required at the same time, however.

Proforma invoice for customers

The second use for proforma invoices is as a commitment by a supplier to his or customer for goods or services to be delivered. The proforma is often used by suppliers for new customers where the business relationship isn't yet established. In this usage, the proforma is similar to a quotation or an estimate.

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