What Is a Proforma Invoice? When and How to Use One
Updated 2026-10-22
A proforma invoice is a document sent before goods or services are delivered that states exactly what will be supplied and what it will cost. It looks like an invoice but is not a demand for payment and does not go into your sales ledger. Buyers use it to approve budget, arrange finance or clear customs; once the work is delivered, it is replaced by a real invoice.
Proforma versus a normal invoice
The documents look nearly identical. The difference is legal and accounting status:
- A proforma is issued before delivery. It creates no receivable and no tax point.
- An invoice is issued after delivery. It creates a debt and usually a tax liability.
Because of that, a proforma should never carry a number from your live invoice sequence. Give it its own series, or your books will show a gap or a duplicate.
When you actually need one
- The buyer needs internal approval. Procurement will not release a purchase order against an informal quote.
- Customs and international shipping. Carriers often require a proforma to value a shipment before it moves.
- Payment up front. You want a deposit before starting, without recognising revenue yet.
- Grant or loan funding. The funder needs a firm figure in writing.
What to put on it
Everything a real invoice carries, plus two things that prevent it being mistaken for one:
- The words “Proforma invoice” clearly at the top.
- A validity date, because prices and exchange rates move.
- A separate reference such as PF-0007, outside your invoice numbering.
- A line stating it is not a demand for payment and no tax is due on it yet.
Turning it into a real invoice
When the work is delivered, issue the actual invoice with a fresh number from your live sequence, referencing the proforma so the client can match them. Never simply relabel the proforma: that breaks the audit trail.
In PaidSeal this is the estimate-to-invoice flow. You send an estimate, the client accepts it, and it converts into a numbered invoice with a payment link, leaving both documents intact and linked.
Frequently asked questions
- Is a proforma invoice legally binding?
- It binds you to the price and terms you quoted for its validity period, but it does not oblige the buyer to pay.
- Can I claim tax on a proforma invoice?
- No. There is no tax point until the real invoice is issued, so it cannot support a tax deduction or reclaim.
- Does a proforma invoice need a number?
- Give it a reference, but from a separate series such as PF-0001, never from your live invoice sequence.
- What is the difference between a proforma invoice and a quote?
- A quote is an offer and often informal. A proforma is a fuller document formatted like an invoice, usually required for approval, finance or customs.
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