Proforma invoice vs invoice
A proforma invoice says “this is what you will be buying, at this price, on these terms”. It is used before shipment, before a deposit, or when a buyer needs paperwork for customs or a purchase approval. It is not a demand for payment and it is not recorded as a sale.
An invoice says “you owe this amount now”. It is issued after delivery, it creates the receivable, and it is what your bookkeeping and the buyer's accounts payable actually process.
When a proforma is the right document
- An international buyer needs a document to arrange a wire transfer
- You want a deposit before starting production
- The buyer's internal approval requires a written quote-like document
- Goods are shipping and customs needs the declared value
What to put on it
- The words “Proforma invoice” and a number that will not be reused
- Issue date and validity date
- Seller and buyer details
- Description, quantity and unit price of each item
- Total, currency, and any tax that will apply
- Payment terms and shipping terms if relevant