What Is a Proforma Invoice? Meaning, Example and When to Use One

A proforma invoice is a preliminary bill a seller sends before delivering goods or services, setting out what will be supplied, at what price and on what terms. It's a good-faith preview of the sale, not a demand for payment: you don't book it as a receivable, and it usually can't be used as a tax invoice.

Proformas are most common in export trade, but contractors who want money upfront and consultants whose clients must approve a budget use them too.

What is a proforma invoice?

Pro forma is Latin for “for the sake of form”. The seller issues it, often at the buyer's request. The US International Trade Administration (ITA) calls it a quote in an invoice format: an invoice's parties, line items and totals, for a sale that hasn't happened yet. That has three consequences.

• No demand for payment. Nobody owes you money because of a proforma, though you can use one to ask for an advance.
• No entry in your books. HMRC's VAT manual says a pro-forma normally has no place in the books of account of either the seller or the buyer.
• Usually no tax invoice. Your buyer generally can't reclaim VAT or GST with it.

Proforma bill, pro forma, pro-forma: one document

US government sites write “pro forma”, HMRC writes “pro-forma”, and many businesses write “proforma”. A proforma bill is the same document, since some businesses say “bill” instead of “invoice”.

When to use a proforma invoice

Send one when the buyer needs a firm, detailed document before the sale. The ITA lists four export cases: applying for an import license, contracting for pre-shipment inspection, opening a letter of credit and arranging a transfer of hard currency.

Import licenses, currency and customs

Import license applications may need the supplier's prices and quantities in writing, and some banks want a proforma before releasing foreign currency. Because it tells the buyer and import authorities what's coming, the ITA says not to change it without the buyer's consent.

Customs also uses the term for a substitute invoice. In the US, importers file one for goods that need no commercial invoice, such as goods not intended for sale, if no other invoice exists. When a required commercial invoice is unavoidably missing at entry, CBP can accept a pro forma against a bond of 1.5 times the invoice value, among other conditions, and the real invoice is generally due within 120 days.

Letters of credit

Under a letter of credit, the buyer's bank commits to pay once you ship and present the documents the credit lists. The bank drafts the credit from the sales terms, often your proforma, and the banks later check your documents against it. Mismatches can delay payment and add bank fees, so keep descriptions, quantities and the Incoterm identical on the final invoice.

Advance payment

For cash in advance, the proforma is what the buyer pays against. The ITA calls this the most secure method for exporters and the least attractive option for buyers, so you may settle for a partial advance, such as 30%. For domestic jobs, a deposit invoice, a real invoice for part of the price, often fits better.

Buyer approval and budgets

Larger customers often need written numbers to raise a purchase order, approve a budget or set you up as a supplier. A proforma gives them that without a bill to pay or cancel.

When not to use one: after delivery. A proforma creates no debt you can chase, so send a real invoice.

Proforma invoice format: what to include

Lay out a proforma like a normal invoice (the guide to professional invoicing covers the basics). Use the ITA's checklist as a base and add the details that make its status clear:

• The title “Proforma Invoice”, so nobody mistakes it for the final bill or books it as a payable. HMRC also recommends the line “This is not a VAT invoice”.
• A proforma number in its own series, such as PF-2026-031, and the issue date.
• A validity date: the last day your prices and terms hold.
• Both parties' details and the buyer's reference, such as their request or purchase order number.
• Line items with description, quantity, unit price, discount and line total.
• Extra costs such as freight, insurance and packing, labeled “estimated” where they are.
• Payment terms and an estimated shipping or delivery date.

The title matters most when a bank or customs office will read it. For a domestic budget approval, a detailed quote or estimate works.

Extra details for export proformas

• The Incoterm, with a named place and version, such as “CPT Port of Mombasa, Kenya, Incoterms 2020”. Each of the 11 rules sets who pays for carriage, who clears customs and where risk passes. As of October 2026, Incoterms 2020 is the ICC's most recent edition, but older ones are still used, so name yours.
• An HS code for each line. The Harmonized System, used by more than 200 countries and economies, gives goods a six-digit code, and countries add digits for their own tariffs. US exporters use 10-digit Schedule B numbers. HS 2028 takes effect on January 1, 2028, so recheck codes for shipments from 2028.
• Country of origin, weights and dimensions: gross weight, package count and volume.

Sending a proforma invoice as a PDF

Send it as a PDF with a searchable file name, such as Proforma-PF-2026-031-Atlas.pdf, and ask whether the buyer's bank needs a signed and stamped copy. An invoice generator app for iPhone can send estimates and invoices as PDFs from your phone.

Proforma vs commercial invoice, standard invoice and quote

These documents can carry the same line items; what differs is timing and obligation. For the domestic side, see quotes, estimates and invoices compared.

According to the ITA, customs in the buyer's country uses the commercial invoice to assess import duties and taxes.

Proforma invoice example: an annotated sample

This proforma invoice sample is from a fictional North Carolina furniture maker to a Kenyan retailer whose bank needed it before releasing a 30% advance in dollars.

What each part does:

1. Title first, so no one mistakes it for the final bill.
2. Number in a PF- series. Ridgeback's invoices use INV- numbers, so there's no gap in that sequence (see how to number invoices).
3. Validity date of 30 days, matching Ridgeback's freight quote.
4. Buyer reference, which Atlas's bank will look for.
5. HS codes and origin on each line. The codes are illustrative, so classify your own goods with customs or a broker.
6. Freight marked “estimated”, so the final invoice can charge the actual cost.
7. Incoterm: under CPT, Ridgeback pays carriage to Mombasa, but risk generally passes to Atlas when the carrier collects the container in the US. Atlas insures the shipment and handles import clearance, duties and taxes.
8. Payment terms with amounts, so the bank knows what to release.
9. Status line saying it's not a tax invoice or a demand for payment.

How to turn a proforma into the final invoice

You don't edit the proforma into an invoice. You issue a new document that replaces it:

1. Get acceptance in writing: a signed proforma, a purchase order or an email quoting the proforma number.
2. Record any advance as a customer deposit, not sales, and send a receipt. If you charge VAT, check whether the advance needs its own VAT invoice (see tax and your books).
3. Issue the final invoice when the goods ship or the work is done (for exports, the commercial invoice), with a new number from your normal sequence.
4. Carry details over exactly and replace estimates with actual figures. Agree any other change with the buyer first.
5. Reference the proforma and purchase order, deduct the advance and show the balance due.
6. Mark the proforma as superseded so it can't be paid twice.

Use your usual layout for the final invoice, or one of these professional invoice templates.

Worked example: from PF-2026-031 to the final invoice

Atlas accepted with purchase order AHI-PO-2290 on June 8 and paid the $11,103.00 advance on June 11, which Ridgeback booked to customer deposits. The container shipped on August 14. Freight came in at $4,020.00, $170.00 over the estimate, and because the proforma labeled freight as estimated, Ridgeback billed the actual cost. The final invoice:

Ridgeback records $37,180.00 of sales, applies the $11,103.00 deposit and carries $26,077.00 in receivables until Atlas pays.

Proformas, tax and your books

Tax authorities generally treat a proforma as a preview. HMRC's UK guidance (checked October 2026) shows how:

• A pro-forma can't be used to reclaim input tax, even if it shows every VAT invoice detail (VAT Notice 700, section 17.3).
• Most deposits create a tax point when received (section 14.2.3), so you normally account for the VAT on an advance in the period you're paid (section 14.1).
• Once you're paid or make the supply, a full VAT invoice must follow within 30 days.
• VAT invoices need a sequential number that uniquely identifies them, another reason to keep proformas in a separate series.

For other countries, see tax invoice vs VAT invoice.

In your books, the proforma creates no entry, but an advance received before delivery is a liability: a contract liability under IFRS 15, usually posted to an account such as “customer deposits”. Apply it against the final invoice, as Ridgeback did.

Rules vary by country and change over time, so check with your tax authority, an accountant or a customs broker before relying on this.

Frequently asked questions