What is a Proforma Invoice? Complete Guide
Understanding Proforma Invoices
A proforma invoice is a preliminary bill of sale sent to buyers in advance of a delivery of goods. It details the exact terms of the sale, including items, costs, and shipping details, acting as a binding agreement but not a formal demand for payment.
When to Use Proforma Invoices
- International Trade: Crucial for customs to calculate duties.
- Securing Financing: Buyers use proforma invoices to secure letters of credit.
- Scope of Work Changes: Used by freelancers to finalize costs before work begins.
Unlike traditional invoices, proforma invoices don't have an invoice number or create an account payable on the buyer's end until the goods are delivered.