Proforma invoice - What is a proforma invoice?
A proforma invoice is a document sent to a buyer in certain circumstances - usually before all invoice details are known
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There are three important things to keep in mind when creating and sending a proforma invoice:
- It is not a true invoice. Issuing a proforma invoice does not mean that a customer is required to make any payments on the products or services listed.
- It is not recorded as an account receivable by the seller. Because it is not a true invoice, it should not be registered as such.
- It is not recorded as an account payable by the customer since payment is not expected, meaning it is not marked as such.
A proforma invoice is simply a document that declares the seller’s commitment to provide the goods or services specified to the buyer at certain prices.
When to use a proforma invoice
If you need to issue a sales document for goods or services that you have not yet supplied, you can issue a proforma invoice to offer the prices on these goods or services to your customer.
They are also often used to declare the value of goods for customs purposes, but are not official invoices, by definition.
Sending proforma invoices
According to the HMRC, they are not considered commercial invoices nor are they VAT invoices, and therefore should be marked with the words 'This is not a VAT invoice'.
If the recipient accepts the goods or services offered in the proforma invoice and you in turn supply them, then you must complete the invoice to issue a proper VAT invoice within the appropriate time limit.
Sample layout of a proforma invoice created in Debitoor
Proforma invoices in Debitoor
In Debitoor, our easy-to-use proforma invoice template is a pre-built form that allows you to quickly create them quickly and professionally in just a few simple steps:
- After signing in to your account, click the Invoices tab and hit the blue button, ‘New Invoice’.
- Add your details, and enter the details of a new customer or select a saved customer from the drop down menu and adjust the design to represent your company's brand.
- Add the product or service information for that order in the item lines.
- Click ‘Save’ instead of ‘Complete Invoice’.
When saved, it will appear in the Drafts list. These drafts are your proforma invoices.
You can also check out our free Excel invoice template by downloading from the link below. Replace your information to quickly create your own proforma invoice. Download a free Excel template now.