Proforma Invoice Explained: When and How to Use One

A proforma invoice is a preliminary document that sets out the cost of goods or services before they're delivered. Think of it as a detailed, invoice-shaped quote: it shows the buyer exactly what they'll be charged and on what terms. The actual (or "commercial") invoice comes later, when you are paid or when you supply. Proforma invoices are common in international trade, custom manufacturing and any deal where the buyer needs cost details upfront for budgeting, financing or customs.

What Is a Proforma Invoice?

Proforma invoice definition: A document issued by a seller before the delivery of goods or completion of services, detailing the expected items, quantities, prices and terms. It is not a tax invoice and does not record a completed sale. The buyer can use it to prepare for the transaction, and the seller can invite payment against it. "Pro forma" is Latin for "as a matter of form."

HMRC's VAT Traders' Records Manual says proformas are often used to offer goods or services to customers who are new to the supplier or whose creditworthiness is uncertain: the goods are supplied only if payment is made. It says a proforma is, in normal circumstances, not an accounting document, should be clearly described as a proforma, and should preferably be endorsed "This is not a VAT invoice" (HMRC: VATREC9010).

Proforma Invoice vs. Standard Invoice

	Proforma Invoice	Standard Invoice
Purpose	Sets out the price and terms before the sale; can invite advance payment	Records the sale and requests payment
Legal status	Not a tax invoice; whether the price binds either side depends on your contract	The seller's record of an amount owed under the sale
When issued	Before goods ship or services begin	When you supply, or when you are paid in advance
Tax use	In the UK, not acceptable evidence for reclaiming VAT	A VAT invoice lets a VAT-registered buyer reclaim VAT
Accounting treatment	Not recorded in either party's books	Recorded as a sale and, until paid, accounts receivable
Customs use	Lets a buyer prepare an import; in the US it can stand in at entry if the commercial invoice follows	The commercial invoice customs uses to value and classify goods

Proforma Invoice vs. Quote/Estimate

Proforma invoices and quotes are similar but not identical:

A quote or estimate is a price offer: the buyer can accept, negotiate or reject it.
A proforma invoice is usually issued once the deal is close. It is laid out like the final invoice, often with trade details, so the buyer can pay an advance, open a letter of credit or apply for an import licence.

In practice, many businesses use them interchangeably for domestic work. The distinction matters most in international trade, where banks and customs brokers may ask for a document titled "proforma invoice".

When to Use a Proforma Invoice

1. International Trade and Customs

When goods cross borders, the buyer often needs a document showing what is being imported and its value before the goods arrive, so they can:

Apply for import licences
Arrange customs clearance with a broker
Estimate duty and import taxes
Open a letter of credit with their bank

In the US, if an importer does not have the commercial invoice at the time of entry, U.S. Customs and Border Protection can accept a pro forma invoice in the form set out in 19 CFR 141.85, with a written declaration and a bond for one and a half times the invoice value; the commercial invoice must then be produced within 120 days of the entry summary, or 50 days if it is needed for statistical purposes (19 CFR 141.91). Other countries set their own rules, so ask your customs broker what the destination accepts.

2. Advance Payment or Deposit Requests

When you need payment before you start, a proforma invoice formalizes the request: "Here's what the order will cost. Please pay this amount so we can begin." HMRC describes the proforma as the document against which payment is invited. Common examples:

Custom manufacturing orders
Large service projects requiring upfront investment
Commissioned creative work
Event services with advance booking

Once the buyer pays, issue a proper invoice for the payment so both sides have an accounting record. In the UK, a VAT-registered supplier must issue a full VAT invoice within 30 days of receiving payment or making the supply (HMRC: VATREC9020).

3. Budgeting and Approval

Corporate buyers often need a formal cost document to get internal budget approval before they can issue a purchase order. A proforma invoice gives them that document, in the format their finance team expects, without recording a sale.

4. Samples and Free Goods

Customs authorities generally want a declared value even for goods sent free of charge, such as samples, demo units or warranty replacements. Shippers often use a proforma invoice to state that value and mark the goods "no charge". Check with your carrier or customs broker what the destination country requires.

5. New Client Onboarding

For new business relationships, a proforma invoice sets clear expectations about pricing before the commitment is final. It's more formal than a verbal quote, and lets you ask for payment upfront from a client you haven't worked with before.

What to Include on a Proforma Invoice

A proforma invoice should look much like a standard invoice, with a few key differences:

Required Elements

"PROFORMA INVOICE" heading, so no one mistakes it for a final invoice; in the UK, add "This is not a VAT invoice"
Your business details (name, address, contact details)
Buyer's details (name, address, contact)
Proforma reference kept outside your invoice number sequence, for example PF-2026-031
Date of issue
Validity period (how long the prices hold, for example 30 days)
Itemized goods or services with descriptions, quantities and unit prices
Total amount, with any tax shown as it will be charged
Currency
Payment terms: any advance you require and when, and the terms for the balance

For International Trade, Also Include

Incoterms rule (delivery terms such as EXW, FOB or CIF; see the ICC's Incoterms rules)
Country of origin for each product
HS codes (Harmonized System tariff codes for customs classification)
Weight and dimensions of the shipment
Estimated delivery date
Shipping method

For a US import entry, 19 CFR 141.85 lists what a pro forma must show, including the names and addresses of the shipper, seller, consignee and purchaser, full descriptions and quantities, the purchase price and the country of origin. A layout with these fields is on the proforma invoice template page.

What NOT to Include

Don't present it as a final invoice with a payment due date for a completed sale; if you need an advance, say "advance payment requested by [date]" instead
Don't give it a regular invoice number; use a separate reference (PF-) so your invoice sequence stays clean
Don't record it as a sale in your accounting system

How to Create a Proforma Invoice

Step 1: Start From a Proforma Layout

Use the same professional layout as your regular invoices, with a proforma heading. The free proforma invoice template includes the trade fields above.

InvoiceQuickly has no proforma document type. The closest is an estimate on Pro ($9/month): it prints as "Estimate" with an EST- number, the client can accept it in their portal, and you convert it to an invoice in one step, then record any advance as a partial payment. That works when a client just needs a priced document to approve. If a buyer, bank or customs broker needs a document titled "Proforma invoice" with trade fields, use the template instead.

Step 2: Mark It Clearly

Put "PROFORMA INVOICE" prominently at the top. If a document looks like a regular invoice but is meant to be a proforma, the buyer's accounts team may book it as a bill, and your own records get confused too.

Step 3: Detail the Transaction

List every item, quantity, price and term. Be specific: the buyer is using this to make purchasing decisions, arrange financing or prepare for customs.

Step 4: Set a Validity Period

Prices change. Material costs and exchange rates move. Include a validity window: "This proforma invoice is valid for 30 days from the date of issue." After that, issue a revised proforma with updated pricing.

Step 5: Include Your Terms

State the payment terms: any advance and the terms for the balance. For example: "50% advance payment required before production begins; balance due Net 30 from the commercial invoice date." Read our guide on payment terms to choose the right structure.

Proforma Invoice Workflow

Here's the typical sequence:

Buyer requests a quote or proforma for goods or services they intend to buy
Seller issues the proforma invoice with itemized pricing and terms
Buyer reviews and approves, and may request changes or negotiate
Buyer uses the proforma for budget approval, an import licence, a letter of credit or an advance payment
Seller issues an invoice for any advance received
Seller delivers the goods or services per the agreed terms
Seller issues the commercial (final) invoice, showing any advance already paid
Buyer pays the balance under the agreed terms

Common Mistakes

Using Proforma Numbers in Your Invoice Sequence

Keep proforma references separate from your invoice numbers. Your invoice numbering system should use a distinct prefix (PF- vs. INV-), and the final invoice can quote the proforma reference.

Assuming a Proforma Fixes the Price

Whether a proforma binds either side depends on your contract terms. If costs change between the proforma and delivery (material prices, exchange rates, scope), agree the change with the buyer before you issue the commercial invoice.

Recording Proformas as Sales

A proforma has no place in either party's books. Record the sale when you issue the real invoice. When income counts for tax depends on your accounting method (below).

Forgetting the Validity Period

Without a validity period, a buyer could come back six months later expecting the same pricing. Always include an expiry date.

Proforma Invoices for Tax and VAT

UK. HMRC says a proforma is not a VAT invoice and is not acceptable evidence for reclaiming input tax. When the supplier is paid against a proforma, or makes the supply, a full VAT invoice must be issued within 30 days, and the tax point follows the normal rules (VATREC9020). Under those rules, a payment received before the supply creates a tax point for the amount received on the date it is received (VAT Notice 700, paragraph 14.2.2), so an advance paid against a proforma is normally when VAT on that amount becomes due. Exports of goods are usually zero-rated only when HMRC's export conditions and evidence rules are met (VAT Notice 703).

US. Sending a proforma does not by itself create income. Under the cash method you include income when you actually or constructively receive it, so an advance payment generally counts in the year you receive it; accrual-method businesses have specific rules for advance payments (IRS Publication 538). State sales tax rules vary.

This is general information, not tax or customs advice; check with your tax authority, customs broker or an adviser. Last reviewed 28 October 2026.

Next Steps

If you send proformas regularly, keep the proforma and the final invoice consistent: the same items, prices and references, with the final invoice quoting the proforma and showing any advance already paid. Before you send either, check our complete invoice checklist.

Download the free proforma invoice template →