Proforma Invoice: Meaning, Format and Sample Template

By the Ultimate Fosters team, makers of UltimatePOS billing and POS software for 10+ years.

A buyer asks for a “proforma” and you aren’t sure what to send. Or you received one and want to know whether to pay it. This guide explains what a proforma invoice is, when to use one, what it must include, and how it differs from a quotation and a tax invoice. It ends with a proforma invoice template you can copy into Word, Excel or Google Docs.

In this guide

• What is a proforma invoice?
• When to use one
• Proforma invoice format: what to include
• Proforma invoice template and sample
• Proforma vs quotation vs tax invoice vs commercial invoice
• Can you pay against a proforma invoice?
• Proforma invoices for export
• Proforma invoices and tax: VAT and sales tax
• How to make a proforma invoice
• Common mistakes
• Questions

What is a proforma invoice?

A proforma invoice is a document a seller sends to a buyer before a sale is completed. It looks like an invoice and shows what the buyer will receive and what it will cost. The US International Trade Administration describes it as a quote in an invoice format.

Three things make it different from a normal invoice:

• It comes before the sale. The goods haven’t been delivered or the work hasn’t been done yet.
• It doesn’t ask for payment as a debt. The buyer doesn’t owe anything until they accept it.
• It isn’t a tax invoice. The buyer can’t use it to reclaim tax such as VAT, and the seller doesn’t record it as a sale.

The seller issues it, usually because the buyer asks for one. You may also see it written as pro forma invoice or preliminary invoice. “Performa invoice” is a common misspelling.

When to use a proforma invoice

Send a proforma when the buyer needs firm details before they can commit or pay.

Proforma invoice format: what to include

A proforma has the same parts as an invoice, plus a validity date and a clear note that it isn’t a tax invoice.

Proforma invoice template and sample (copy this format)

Here is a filled example for an order of office furniture with an advance payment. Use the layout as it is and change the details to your own.

Sample amounts: 10 × 45.00 + 5 × 80.00 = 850.00; tax at 10% = 85.00; plus delivery 15.00 = 950.00. Use your own tax rate.

Blank proforma invoice template to paste into Word, Excel or Google Docs

Copy this, paste it into a new document, fill in the brackets and save it as a PDF before you send it.

PROFORMA INVOICE
This is not a tax invoice

Proforma no.: PI-0001
Issue date: [date]
Valid until: [date]
Currency: [USD / GBP / EUR / AED / ...]

From (seller): [business name, address, phone, email]
Seller tax ID: [VAT or tax number, if registered]
To (buyer): [buyer name and address]
Buyer tax ID: [if registered]
Buyer reference / PO: [if any]

#  Description            Qty   Unit price   Amount
1  [item or service]      [ ]   [ ]          [ ]
2  [item or service]      [ ]   [ ]          [ ]

Subtotal:                 [ ]
Discount:                 [ ]
Tax ([VAT / sales tax] at [ ]%): [ ]
Shipping / delivery:      [ ]
Total (estimated):        [ ]

Delivery: [date or time after payment, place, Incoterm for exports]
Payment terms: [advance %, balance due when, payment methods]
Bank details: [bank, account no., IBAN / SWIFT / routing no.]
Note: Prices are valid until the date above. The final invoice will
be issued when the goods or services are supplied.

Authorised signature: ____________

Sending more than a few proformas a month? Billing software can fill this layout from your product list and turn it into the final invoice in one step. See how that works.

Proforma invoice vs quotation vs tax invoice vs commercial invoice

These four documents look alike but do different jobs.

Proforma invoice vs quotation

A quotation is an early price offer, often one of several the buyer compares. A proforma comes later, when the buyer is ready to go ahead, and is laid out like the final invoice with tax, delivery and payment terms. Many businesses send a quotation first and turn it into a proforma once the buyer agrees.

Proforma invoice vs tax invoice

A tax invoice is the legal bill for a supply. It is recorded as a sale, the seller pays the tax shown on it, and in VAT countries the buyer can use it to reclaim that tax. A proforma does none of this. It only shows what the tax invoice will say.

Proforma invoice vs commercial invoice

In exports, the proforma comes before shipment so the buyer can arrange the licence, letter of credit or payment. The commercial invoice goes with the shipment and is used to bill the buyer and clear customs.

Can you pay against a proforma invoice?

Yes. Paying an advance against a proforma is common, especially for custom orders, bulk orders and imports. The proforma tells you what you are paying for. Two things to remember:

• Ask for the final invoice. When the goods or services are supplied, the seller should issue the final invoice for the full amount, showing the advance you already paid.
• Check the validity date. The seller sets it. If you pay after it, the price may change. There is no fixed legal time limit.

For sellers: the proforma is not a binding bill on its own, but once the buyer accepts it, treat its prices and terms as agreed. trade.gov advises that changes should not be made without the buyer’s consent.

Proforma invoices for export

Importers often need a proforma before they can buy. According to trade.gov, buyers use it to apply for an import licence, arrange a pre-shipment inspection, open a letter of credit or arrange a transfer of foreign currency. Customs and banks rely on the details, so be exact.

For an export proforma, add these to the standard fields:

• HS code for each product
• Country of origin
• Weights and dimensions of the shipment
• Incoterm and delivery point (for example FOB or CIF, and the port)
• Currency of the sale
• Estimated shipping date

Proforma invoices and tax: VAT and sales tax

In most countries a proforma isn’t a tax invoice. Show the expected tax on it so the buyer knows the full cost, but the tax is charged on the final invoice, and the buyer can’t use the proforma to reclaim VAT. Give proformas their own number series (PI-0001, PI-0002…) so your invoice numbers stay in order.

United States (sales tax and customs)

There is no VAT in the US. Sales tax is set by states and local governments and is charged when the sale is made, so a proforma only shows an estimate. For imports, US customs regulations let an importer file a pro forma invoice when the commercial invoice isn’t available at entry. The commercial invoice still has to be produced afterwards (19 CFR 141.85).

United Kingdom (VAT)

HMRC says pro-forma invoices used to offer goods or services can’t be used as evidence to reclaim input tax (VAT Notice 700, sections 17.3 and 19.5.1). Mark them “This is not a VAT invoice” and issue a VAT invoice when you make the supply.

UAE (VAT)

A business reclaims input VAT once it receives and keeps a valid tax invoice (Article 55, Federal Decree-Law No. 8 of 2017). A proforma isn’t a tax invoice, so wait for the tax invoice before claiming the VAT.

India (GST)

India’s sales tax is GST. The buyer can’t claim input tax credit on a proforma: Section 16(2)(a) of the CGST Act requires a tax invoice or debit note (CBIC). List HSN codes on the items and issue the GST tax invoice when you supply. If you take an advance, ask your accountant how GST applies to it.

Other countries: the same idea applies in most VAT and sales tax systems, but check your local rules or ask your accountant.

How to make a proforma invoice

Option 1: a template in Word, Excel or Google Docs

Copy the sample above, fill in your details and save it as a PDF. Then send it by email or WhatsApp. This works well if you send a few proformas a month.

It gets harder as you send more. You type the same items into the quotation, again into the proforma and again into the tax invoice. Numbers get skipped or repeated. You also have to check by hand which proformas turned into sales.

Option 2: billing software

Billing software keeps the quotation, proforma and final invoice as one record, so you enter the items once. Here is how it works in UltimatePOS, our self-hosted POS and billing software:

1. Create a quotation for the buyer.
2. On the quotations list, choose Convert to proforma invoice from the action menu. (If there is no quotation, add a sale and set its status to Proforma instead.)
3. The proforma is saved in the drafts list, ready to print or send.
4. When the buyer confirms or pays, convert it to a final invoice. It is then recorded as a sale.

You set the heading printed on proformas, such as “Proforma Invoice”, in your invoice layout, along with your logo, tax number and terms. See the step-by-step proforma invoice guide in our documentation.

Common proforma invoice mistakes

• Calling it “Invoice”. Write “Proforma Invoice” so nobody records it as a sale or a tax invoice.
• No validity date. Without one, a buyer can come back months later expecting the old price.
• Using your invoice numbers. This leaves gaps in your invoice series when a proforma doesn’t turn into a sale.
• Leaving out tax or delivery. The buyer approves one amount, then the final invoice shows another.
• Changing prices after the buyer accepts. Agree any change with the buyer first.
• Forgetting the final invoice. After supply, issue the final invoice and show any advance received.

Proforma invoice questions

What is a proforma invoice in simple words?

It is a bill you send before the sale happens. It tells the buyer exactly what they will get and what it will cost, so they can approve the order or pay an advance. It is not a final invoice and not a tax invoice.

Is it proforma or performa invoice, and what does pro forma mean?

The correct spelling is proforma (or pro forma), from the Latin for “as a matter of form”. So a proforma invoice is an invoice in form only: it looks like one but isn’t a bill yet. “Performa” is a common misspelling of the same thing.

Who issues a proforma invoice?

The seller. The buyer usually asks for one to approve the purchase, arrange payment, or, for imports, to apply for an import licence or a letter of credit.

Can a proforma invoice be used as an invoice?

No. It shows the expected price but doesn’t record a sale. After the goods or services are supplied, the seller issues a final invoice (a tax or VAT invoice where tax applies).

Do you have to pay a proforma invoice?

Not as a debt. It isn’t a demand for payment. Many sellers do ask for an advance against a proforma, though, and buyers pay it to confirm the order. The final invoice follows.

How long is a proforma invoice valid?

There is no fixed legal time limit. The seller sets a “valid until” date on the proforma, for example 15 or 30 days. After that date, prices can change.

Is a proforma invoice legally binding?

On its own it is an offer, not a bill. Once the buyer accepts it, for example by paying the advance, its terms can become part of the sales agreement. That’s why the seller shouldn’t change prices or terms afterwards without the buyer’s agreement.

Does a proforma invoice include VAT or sales tax?

It can, and it should if tax will apply, so the buyer sees the full cost. The tax shown is an estimate. The tax is charged on the final invoice.

Can I reclaim VAT on a proforma invoice?

No. In the UK, HMRC says a pro-forma invoice can’t be used as evidence to reclaim input tax (VAT Notice 700). The UAE has the same rule: you reclaim VAT once you hold the tax invoice (Article 55, Federal Decree-Law No. 8 of 2017). In India, input tax credit under GST also needs a tax invoice. Wait for the supplier’s tax invoice.

Can a proforma invoice be used for US customs?

Yes, as a stopgap. US customs regulations let an importer file a pro forma invoice when the commercial invoice isn’t available at entry. The commercial invoice still has to be produced afterwards (19 CFR 141.85 and 141.91).

What comes first, a purchase order or a proforma invoice?

Either can. Often the buyer asks for a proforma first to get internal approval, then sends a purchase order. In other cases the buyer sends a purchase order and the seller replies with a proforma to ask for an advance.

What is another name for a proforma invoice?

Pro forma invoice, preliminary invoice or advance invoice. In trade, it is described as a quote in invoice format.

Sources

• International Trade Administration, Pro Forma Invoice: trade.gov
• HMRC, VAT guide (VAT Notice 700), sections 17.3 and 19.5.1: gov.uk
• US Code of Federal Regulations, 19 CFR 141.85 (pro forma invoice): law.cornell.edu
• CGST Act, Section 16 (input tax credit), CBIC tax information portal: taxinformation.cbic.gov.in
• UAE Federal Decree-Law No. 8 of 2017 on VAT, as amended (Article 55): tax.gov.ae
• UltimatePOS documentation: Proforma invoice, Invoice layout

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