En:Pro forma invoice
A pro forma invoice is a type of quotation that is often used to calculate the value of goods in international trade. It gives a detailed insight into the sale before the transaction actually takes place. This form of invoice shows the potential buyer what they will have to pay if they decide to make the purchase. It includes information such as the description of the items sold, shipping costs and additional fees. It is important to note that a pro forma invoice is not a legally binding document - it does not automatically mean that the sale must go through or that the price cannot be changed. Rather, it is a preliminary document for the buyer's information. It has more the character of an order confirmation.
Structure of a pro forma invoice
A pro forma invoice should contain the following information:
- Company name and address of the seller.
- Name and address of the buyer.
- Clear labelling as ‘pro forma invoice’.
- Date of issue.
- A unique number or reference for the invoice (however, this may differ from the requirements as it is not a final invoice).
- Description of products or services, including quantities and prices.
- Total amount of the invoice.
- Currency indication (if not in Euro).
- Terms of delivery and payment, if applicable.
It is important to note that a pro forma invoice is not a legally binding document and therefore does not include or is authorised to show VAT. It merely serves to provide the recipient with advance information about a planned delivery or service before the actual invoice is issued.
Creating a pro forma invoice
Create an order confirmation for a VAT-exempt foreign customer in the programme and adjust the document text (order / documents) of the order with the word "PROFORMA INVOICE".
Difference to the commercial invoice
A commercial invoice is an official financial document issued by the seller to the buyer after delivery of the goods or services. It contains similar information to a pro forma invoice (description of goods/services, prices, etc.), but is considered a legally binding document and can be recorded in the buyer's accounts. To summarise: The proforma invoice is effectively an offer or preliminary information to the customer before the purchase/delivery, whereas the commercial invoice is issued after the purchase/completion of the transaction and represents a legal claim for payment.