What Is a Proforma Invoice?

When a proforma invoice is the right document

The common thread is that the buyer needs a formal document showing the amount before you are in a position to raise a real invoice.

• The client needs an invoice-shaped document to release budget or get internal purchase approval
• You require payment in advance and the client cannot pay against a quotation
• Goods are being shipped internationally and customs requires a declared value
• The client needs to arrange a letter of credit or foreign exchange
• A new client wants formal confirmation of price and terms before committing

Proforma invoice vs quotation

A quotation is a sales document. It is an offer, aimed at winning the work, and it usually carries a validity period and scope details.

A proforma invoice is an administrative document. It usually appears after the client has already decided to proceed, and its job is to let them process the payment or approval. It is laid out like an invoice rather than like an offer.

In practice many small businesses can use a quotation for both purposes. Reach for a proforma only when the client specifically asks for something that looks like an invoice.

Proforma invoice vs commercial invoice

A commercial invoice is the real, final document issued once goods or services have been supplied. It records a debt, enters your accounts as a sale, and is what the tax authority expects to see.

A proforma does none of those things. It is provisional, carries no accounting entry, and cannot generally be used to reclaim tax. The proforma always has to be followed by a proper invoice once the supply actually takes place.

What to put on a proforma invoice

The content mirrors a normal invoice, with the labelling doing the important work.

• The words "Proforma Invoice" prominently at the top
• Your business name, address, contact details and tax number where applicable
• The client business name and address
• A reference number from a separate sequence, such as PRO-001
• The issue date and a validity period
• An itemised description of the goods or services with quantities and rates
• Subtotal, discount, tax rate and estimated tax, and the total payable
• Payment terms and full payment details
• A note that this is not a demand for payment and that a full invoice will follow
• For international shipments: country of origin, weight, and commodity codes if required

Numbering and record keeping

Do not take numbers from your main invoice sequence. Gaps or duplicates in that sequence create real bookkeeping problems at year end. Use a separate prefix such as PRO-001 so proformas are unmistakable in your records.

Keep the proforma alongside the invoice that eventually replaces it. If the amounts differ, which happens when scope changes between approval and delivery, the pair explains the difference.

The tax point matters

Because a proforma is not a tax invoice, it usually does not create a tax point and generally cannot be used by the buyer to reclaim VAT or sales tax. Once payment is received or the supply is made, you must issue a proper invoice.

The precise rules on tax points, advance payments and what qualifies as a valid tax invoice vary meaningfully between countries. Treat the above as the general shape and confirm the specifics with an accountant in your jurisdiction, particularly if you are trading across borders.

Creating one

A proforma is structurally an invoice, so any invoice template works. Set the document title to "Proforma Invoice", use a separate numbering prefix, and add a line in the notes saying that a full invoice will follow on supply.

In QuillBill you can set the document title and number freely, so producing a proforma is simply a matter of labelling an invoice correctly and exporting the PDF.