Everything you need to know about proforma invoices

When using invoices within business, it is important to know which type of invoice is needed at any given time. This article will detail the ins and outs of proforma invoices

Author: Tim Randall | Last Updated: 04/01/2022

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Everything you need to know about proforma invoices

What is a proforma invoice?

A proforma invoice is a preliminary bill of sale that you would send a customer before delivery of your goods or services. This document follows a similar layout structure to generic invoices, with slight differences to some content. The main purpose of these documents is to provide an estimate of the final cost of the service, before sending any requests for payment.

Why use proforma invoices?

Proforma invoices are common within businesses that trade internationally. Since these documents often include information about packaging, item weights, dimensions, and delivery fees, they are especially useful during the process of international shipping. When sending goods across countries, in many cases, your package will have to clear customs for any countries it enters from the start of the journey to its final destination. These invoices provide information on the value of the item and the reason for its delivery, allowing it to pass through customs quickly so they can be delivered to the customer in a timely manner.

Another reason to use proforma invoices, is when the customer shows commitment to a purchase but for some reason the final details of the order haven't been confirmed yet. This process will detail the cost of goods to the customer, helping them to ultimately decide if they will go ahead with the purchase. However, this can be considered a good faith agreement between the customer and potential supplier.

Information to include on a proforma invoice

  1. As said before, proforma invoices should fully a similar structure to commercial invoices, and should include all this information:
  2. The term proforma should be clear at the top of the document declaring the type of invoice.
  3. Issue date of invoice
  4. Supplier's business information
  5. Customer's contact and delivery information
  6. Details of shipments delivery
  7. A brief description of individual goods to be supplied, if shipping internationally, this should include estimations on the package weight, as well as the dimensions of the box it will be shipped in
  8. The terms and conditions that will govern any official purchases to follow

If you include all the above information in your current invoice templates, then it might be easier to simply adjust that template to suit the format of proforma invoices. This way, you can quickly alter the invoice title to proforma, and then remove the unnecessary information that regular invoices include. This would include removing the invoice number and any means of requesting payment, since this would indicate that it was an official invoice and would make the document legally binding. These documents should not be legally binding, so it is important to keep in mind the differences between commercial and proforma invoices.

Once issuing the proforma invoice, If the customer is happy to go ahead with the final purchase, you can convert this into a final invoice, and then issue it to request payment from the buyer. A final thing to keep in mind, is that some countries require these documents as per their import procedures, and for countries that aren't shipping from Europe to Europe, a commercial invoice might be required alongside this. This typically happens when a European country supplies goods to another country that lies outside of Europe. This became necessary as shipping couriers must follow strict country dependant rules regarding import taxes and fees.

Zigaflow's Invoice Module

With our inclusive invoice module, you will have the power to auto generate and approve any invoice documents your business requires. Generate and email invoices at the click of a button from quotes, jobs, delivery notes and more. The ability to automatically link documents to clients streamlines the process by clearly showing what you've billed and when. If you use Stripe as a payment method, you'll have the freedom to integrate both platforms together for the ultimate ease of access.

Tim Randall

Tim Randall

CEO

With an extensive background in business analysis and software programming, Tim heads up our software development team and loves nothing more than solving complex business challenges with simple easy to use software.

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