What is a proforma invoice? Explanation, tips & samples

Here’s a quick introduction to proforma invoices and how to use them in your business.

In this article, you’ll learn:

• What a proforma invoice is

• What information goes on a proforma invoice

• The difference between a proforma invoice and an invoice

• The difference between a proforma invoice and a quote

• When you should use a proforma invoice

• How to find a proforma invoice template

• How to create a proforma invoice

What is a proforma invoice?

You may be familiar with the term ‘proforma invoice’, especially if you’re a business owner already adept in the world of invoices. But for those still scratching your heads, a proforma invoice is a preliminary bill of sale that is sent to a customer before the final details of the sale are confirmed (e.g. quantity or materials).

A proforma invoice is not legally binding. A standard invoice must be issued once the final details of the sale have been confirmed and it’s time for the customer to pay.

What information goes on a proforma invoice?

In the UK, there are no specific requirements regarding the structure of a proforma invoice. But it’s both easier and safer to have it resemble the structure of the finalised invoices you create.

As a result, proforma invoice templates generally include:

• The date of issue

• Contact details for both the buyer and the seller

• Details of the goods or services, and their agreed prices

• VAT and other applicable taxes

• Shipping costs, if any

• The total amount due

Just remember to properly label it as ‘Proforma’ and make sure it doesn’t contain an invoice number, as this will change what is an informal document into a binding one. A payment due date and exact date of delivery are also not required.

What’s the difference between a proforma invoice and an invoice?

A proforma invoice looks very similar to an invoice, but what differentiates the two is that a proforma invoice’s terms of sale can still be changed. This means that it only applies to sales that have not yet been completed.

They also don't have a unique, sequential invoice number, which is required on all standard invoices. Proforma invoices must also clearly include a “Proforma” label, so as not to get confused with other sales documents. 

Crucially, a proforma invoice has no fiscal value and doesn't contain a means of payment, so it should not be included in your accounting records.

While proforma invoices are created before the final details of the sale are finalised (e.g. quantity or size), standard invoices are sent when goods have been sold or services rendered and the payment is now due. 

Invoices are binding, and the customer has an obligation to pay the price stated. Unlike with proforma invoices, you can use invoices to reclaim VAT.

In short, you should issue a proforma invoice before the details are finalised and an invoice when that sale is finalised.

What’s the difference between a proforma invoice and a quote?

On the surface, proforma invoices and sales quotes have a lot in common. They’re both used largely in the same way, both provide information about a sale and neither are legal documents in their own right. Where they differ is in their purpose.

A quote is sent to a potential customer who has expressed interest in buying from your business. It's considerably less formal than a proforma invoice and is usually sent during the early stages of the sale when the customer initially enquires about your prices.

Importantly, a quotation is not a document with any kind of obligation or expectation behind it. It holds no financial value and the sale can be accepted by the customer or it can just as easily be cancelled without any consequences.

A proforma invoice is also sent to a customer before your products are delivered or your services are provided, but it's considered more binding than a quotation – although not legally binding like a completed invoice.

More details are provided, and there's room for manoeuvre in terms of negotiation before any payment is made.

In most cases, a proforma invoice is issued after the customer has committed to the purchase, but the final details of the sale are yet to be confirmed (e.g. quantity).

When should I send a proforma invoice?

There are two main reasons why your business would need to create a proforma invoice in advance of the actual sale. Either you want to declare an estimate of the final cost of the item(s) or service(s) you’re providing, or you want to ship internationally.

Cost estimate

Proforma invoices serve as a sort of good-faith agreement between you and your customer. They’re a baseline for a sale, a breakdown of the items with an accurate indication of the total amount due – but you are not requesting payment.

This makes a proforma invoice the ideal option when a sale hasn’t yet been finalised or the goods or services are still under negotiation, as you’re providing a format that can later be adjusted if necessary.

International shipping

Since they often include details about shipping, packaging, weight, and delivery fees, proforma invoices are often used in the international shipping industry. They help to declare the value of an item so that it can pass through customs quickly and be delivered to your customer on time.

Proforma invoice template

Finding a decent proforma invoice template can help you create compliant, complete proforma invoices quickly and easily. Below, we’ve provided a sample proforma invoice for a taxi driver created with SumUp Invoices. It's customised to suit their work and includes all of the mandatory proforma information. 

As you can see, this template includes a “Proforma Invoice” label, the date of issue, contact details for both the buyer and the seller, details of the service to be provided, and the prices.

How do I create a proforma invoice?

While Word and Excel offer invoice templates, they take time and meticulous attention to detail to fill in correctly. If you enter numerical data incorrectly, you might encounter complications further along in the sales process.

Invoicing software is the safest option for any business seeking full and prompt payments as well as quick and easy bookkeeping. Most invoicing software, including free options like SumUp Invoices, helps you create invoices, proforma invoices, quotes and other sales documents quickly.

SumUp Invoices provides easy-to-use templates that can be used to create and send proforma invoices in less than a minute. And with everything automated, your invoices are guaranteed to be faultless and compliant. No tedious updating or double-checking of details. It’s automatic and instant.

This is ultimately essential in the running of a business, as issuing error-free sales documents increases your professionalism, facilitates the payment process, and keeps your books in tip-top shape.