What Is a Proforma Invoice? Uses & Worked Example

A proforma invoice is a preliminary document describing a proposed supply, its price and its terms. Sellers use it to confirm order details, support a buyer’s approval process or request an advance before completing the transaction. It should be clearly labelled so it is not mistaken for the final commercial or tax invoice.

A proforma can contain payment instructions. The important distinction is that its title does not make it a tax invoice or proof of payment. Receiving an advance can still create tax and record-keeping obligations.

When a proforma is useful

• Advance payment: the buyer needs the agreed amount, bank details and order reference before paying.
• Purchasing approval: a finance team needs an itemised document to approve an order.
• Proposed shipment: the parties need a record of quantities, currency and shipping arrangements before dispatch.
• Trade paperwork: a buyer, bank or customs agent asks for preliminary transaction details.

Ask the requesting party what information and document type it needs. A proforma accepted for internal approval may be unsuitable for customs clearance. Requirements depend on the destination, transaction and carrier; this tool does not validate customs documents or assign tariff codes.

Proforma, quote and final invoice compared

Document	Practical purpose	What to check
Quote	Present an offer for an agreed scope	Price, validity, exclusions and acceptance
Proforma	Set out a proposed transaction, sometimes for advance payment	Order details, provisional amounts and clear document label
Commercial invoice	Record the commercial transaction for billing or trade	Final supplied items and required transaction particulars
Tax invoice	Provide the invoice particulars required by a tax regime	Registration, tax treatment, issue timing and legal fields
Receipt	Acknowledge money actually received	Amount, payment date and invoice or order reference

A commercial invoice and a tax invoice can be the same document when it meets the applicable requirements. Avoid assuming that every international shipment uses one universal format.

What to include on your proforma

Start with a prominent Proforma Invoice heading, a separate proforma number and an issue date. Add:

1. Seller and buyer identities, addresses and contact details.
2. Order or quote reference and validity period.
3. Descriptions, quantities, unit prices and currency.
4. Discounts, proposed tax and shipping charges, with their assumptions.
5. Proposed total, advance requested and payment instructions.
6. Delivery schedule, destination and agreed responsibility for transport costs.
7. Conditions that must be satisfied before supply or dispatch.

For trade-specific particulars such as origin, weights or tariff codes, use verified information from your trade records and adviser. Do not guess a code to complete a template.

If the amounts are provisional, say which ones can change and how the buyer will approve a revision. Keep the accepted version, especially when payment references it.

Worked example: requesting an advance

This fictional USD order assumes no tax, duties or insurance. It illustrates the document workflow, not an export-ready format.

Proforma PF-0021, issued 4 October 2026, valid until 18 October. Proposed dispatch is within ten days after the agreed advance is confirmed.

Proposed charge	Quantity	Unit price	Amount
Custom display stands	20	$45.00	$900.00
Packing and delivery	1	$100.00	$100.00
Proposed order total			$1,000.00

Payment terms: $400 advance requested on order acceptance; remaining $600 under the agreed final billing terms. Use PF-0021 as the advance reference. Specify that delivery is to the agreed address and explain any excluded charges.

The document shows a $1,000 proposed order, a $400 requested advance and a later $600 balance. Until the $400 arrives, do not describe it as “amount paid.” After receipt, record the payment separately and issue any required tax or payment document.

Does a proforma avoid VAT or GST obligations?

No. The document label does not determine whether a payment or supply creates a tax obligation. For the UK, HMRC’s proforma guidance says this type of proforma cannot support an input-tax claim and should identify that it is not a VAT invoice. A proper VAT invoice is required when supply or payment triggers the applicable requirement.

HMRC’s tax-point guidance also explains that advance payments can create a tax point. For India or another jurisdiction, confirm the advance-payment and invoice rules that apply to your goods or services. Do not rely on “proforma” to defer tax reporting.

Convert to a final invoice without losing the trail

Save the proforma in Documents, then change its document type to Invoice in the editor. A new document identity and number are created; the saved original remains available. Check the final quantities, charges, issue date, due date and tax particulars instead of sending the provisional figures unchanged.

Add the proforma or order reference to the new document. Conversion resets payment records, so enter any advance actually received and reconcile any earlier advance invoice. Save and export the final version. The app does not register tax e-invoices, submit customs declarations or verify payments.

Mistakes to avoid

• Treating the proforma as a receipt for an unpaid advance.
• Booking a proforma and its final invoice as two independent sales.
• Assuming proposed tax amounts are validated by the generator.
• Leaving expired validity dates or provisional shipping costs on the final invoice.
• Failing to reconcile an advance already billed or received.

Use the proforma invoice generator for the preliminary document, and the invoice guide for final billing checks. All figures above are illustrative; obtain transaction-specific tax or trade advice where necessary.