Have you ever heard of the terms ‘proforma invoice’ and ‘draft invoice’ but are unsure of what they actually mean? Don’t worry, these two invoice types can certainly cause some confusion. In this article, I will explain what proforma and draft invoices are, how they are used, how they differ from each other, and how to create them.
What is a proforma invoice?
A proforma invoice is a document sent to a customer before all of the details of the sale have been finalised. It will state ‘proforma invoice’ on the document to differentiate it from a full invoice, however, it will usually have the same format as a full invoice.
A proforma invoice will be sent to a customer instead of a full invoice in the case of the customer showing a commitment to the purchase but the final details have not yet been confirmed.
It is different from a quotation as a quotation is issued when the customer has submitted an enquiry but not yet committed to a purchase.
What is a draft invoice?
A draft invoice is exactly how it sounds, a draft. It is an invoice template that is saved for you to either make future modifications or convert into a proforma or full invoice to send to the customer.
A draft invoice is not an official document that can be sent to a customer. For example, it would be created if a customer has committed to a sale, however, will need to get back to you with specifics, like the number of products being purchased.
How does a proforma invoice and draft invoice differ?
A proforma invoice is a document that is issued to a customer, whereas a draft invoice cannot be sent to a customer. A proforma invoice is an actual document, whereas a draft invoice is a preliminary outline of the sale only for your records.
You can think of a draft invoice as a sale ‘in progress’, whereas a proforma invoice is a sale ‘waiting to be finalised’. Essentially, they are created at different stages of the sale process.
Examples of when to send proforma or draft invoices
I’ll provide some relatable examples of when to issue a proforma invoice and when to create a draft invoice.
Example 1 - proforma invoice
Sally calls a bakery to purchase a birthday cake for her son. She tells the baker that it should have a picture of Spider-Man on the top, but she will need to find the right picture and send it to the baker.
The baker issues a proforma invoice for the cake but states that the cost may differ slightly depending on the picture that is to go on the cake.
Example 2 - draft invoice
Tom runs a construction company. One of his regular clients, Andy, calls him to make sure that he has availability next week to get some work done. Tom confirms he’s available and Andy will call him back with the specifics.
Since Andy is a regular customer, Tom already knows the type of work that will be done so he starts creating a draft invoice so he can instantly send it to Sam when he calls back to confirm the details.
Creating proforma invoices and draft invoices with invoicing software
Using invoicing software can help you with all of your invoicing needs. With Debitoor, you can create proforma invoices, draft invoices, completed invoices, quotations, and accounting reports.
In just a few clicks, you can create a professional customised document, send it to your client, and have them pay via various payment methods.
Full invoices and proforma invoices require specific information such as your company’s details, your customer’s details, the invoice date, the products or services being sold, the quantity and price, any VAT (if applicable), the due date, the payment terms (if applicable), and the totals.
With Debitoor, you can save product and customer information so you can quickly select the information when creating a document. You can also input your business details and customise your documents to make them unique to your business. Debitoor will make sure that all of the required information is on the document.
Here is an example of a proforma invoice created with Debitoor invoicing software:
With Debitoor, you can send the proforma invoice to the customer, and once they have confirmed the sale, issue a full invoice to be paid.
You can also easily create a draft invoice for your records to be completed at a later time. All you need to do is create a new invoice, enter the information you currently have, and then click ‘Save’. This will save it to your account, but not send it to the customer.
You can later edit the information and convert it into a proforma invoice or full invoice to send to your client.
If you wish to create a proforma or draft invoice, feel free to give it a try with our 7-day free trial.