What is a pro forma invoice?

A wholesaler gets an order from a new customer who would rather pay up front. Or a small manufacturer sends a sample abroad and customs wants to see its value. In both cases you need a document that looks like an invoice but is not yet a real bill. That is the pro forma invoice.

The difference from a quotation is subtle. A quotation is an offer, and the customer can still say no. You use a pro forma invoice once the deal is made and the customer needs a bill in order to arrange something, such as a payment or a permit. It shows what will be invoiced.

The key point is that a pro forma invoice is not an accounting record. It creates no debt, it does not belong in your turnover and you do not use it for VAT. Only when you deliver, or the payment has arrived, does the real sales invoice follow. Mark clearly on the document that it is pro forma, so nobody mistakes it for a genuine bill.

In trade with other countries, including within the EU, carriers and customs often ask for such a document showing the value of the goods. What exactly they want to see differs by country and by shipment. Ask the carrier or your bookkeeper, and also look at the rules for intra-community supplies.

What goes wrong? A pro forma invoice takes a number from the same series as real invoices, which leaves gaps or duplicates. Or the customer pays against the pro forma and the real invoice never follows, so the payment cannot be matched neatly. Use separate numbering or a clear label.