The information regarding the particulars of the goods and services provided or supplied to a client or customer is known as proforma invoice. The information of the product or service states the estimation of any commission, applicable tax, or a commercial tax and it is not the same as the commercial invoice. Proforma is issued before starting a sale and it consists of details that are going to be included. The total amount in the proforma and the invoice will be same or closes to the amount on the proforma invoice.
Purpose of providing proforma invoice:
ü The purpose of the proforma invoice is to provide the estimated sale price of the goods or services that are yet to be provided or supplied.
ü It contains the details to be shipped, the value of goods, shipping time, and other details.
ü Proforma is best when the companies are doing business for the first time together thus it will make clear about the invoicing process.
ü Finally issuing the proforma will declare the suppliers to provide with the customer committed goods and services described at a specified price.
Essential contents to be present in the proforma invoice:
ü The proforma invoice must consist of the following information.
ü The unique number of invoicing
ü Data preparation
ü Contact and address details of the supplier
ü Contact and address details of the prospective buyer
ü The goods or service description with their unit price and total
ü The proforma validity
ü The proposed terms and condition of the sale
ü The proposed terms of sales and payments
ü Custom authorities’ certification if required
ü The signature of the authorized supplier or providers
Difference between invoice and proforma:
Ø The main objective of proforma is to help the buyers in deciding the orders. The invoice will notify the buyer about the payment is due.
Ø The time of the issue of performance is before the delivery of the goods and services. Then the invoice is received before the payments.
Ø Both the proforma and invoice are raised by the supplier to the buyer.
Ø The effect of acceptance in performance leads to the creation of a new sale and the effect of acceptance of an invoice is confirmed.
Ø These are some of the differences between proforma and invoice.
Ø Reason to use proforma invoice widely in the international transaction:
Ø It is considered a binding agreement so this will lead to the experience of good bonding in your business.
Ø It is required by most of the countries as a part of licensing procedures during importing.
Ø The importer is given an open letter of credit by using proforma by bankers and financial institutions.
Ø It can be easily recognized because it is same as the commercial invoice that traders are familiar
Final thoughts:
So proforma invoice is very essential in business and there are many invoice software providing the proforma invoice and one among them is Invoice Ofice. You can create proforma and develop your business to the next level so the customer does not feel surprised when they get the perfect invoice.
