What Is a Pro Forma Invoice?

Proforma invoice is also called pre-invoicing. At the request of the importer, the exporter will sometimes issue an informal reference invoice for the name, specifications, quantity, unit price, estimated total value, etc. of the goods to be exported for the importer to submit to their domestic financial or foreign trade regulatory authority For the application of import license and approval of foreign exchange, it is not a formal document, and it can neither be used as the accounting basis of the two parties to the transaction, nor can it be used for collection and negotiation, and it has no final binding force on the two parties. When a formal transaction is performed to fulfill the contract, a formal invoice must still be issued in accordance with the relevant provisions. ^[1]

proforma invoice

Proforma invoice is also called pre-invoicing. At the request of the importer, the exporter will sometimes issue an informal reference invoice for the name, specifications, quantity, unit price, estimated total value, etc. of the goods to be exported for the importer to submit to their domestic financial or foreign trade regulatory authority For the application of import license and approval of foreign exchange, it is not a formal document, and it can neither be used as the accounting basis of the two parties to the transaction, nor can it be used for collection and negotiation, and it has no final binding force on the two parties. When a formal transaction is performed to fulfill the contract, a formal invoice must still be issued in accordance with the relevant provisions. ^[1]

The most important thing about proforma invoices is to clearly list the following offers:

1. Goods name

2.Quantity

3. The transaction price method is

1. As a quantitative quote.

2. As sales confirmation.

3. Allow buyers to apply for import permit, foreign exchange permit and issuance

Pro forma invoice

In use, if the proforma invoice has the content of the quotation and constitutes a legal offer, it can be used instead of the quotation, or even a sales confirmation.

Proforma invoices can also be used in other situations that require settlement.

(1) For prepayment, that is, cash payment is required before loading.

(2) In the consignment method, the exported goods are not placed in the sales contract, but are placed in the hands of the agent. For the agent, the formal invoice can be used as a guide for quoting to potential buyers.

(3) In the case of bidding, proforma invoices enable buyers to sign sales contracts at reasonable prices and conditions of sale among many competing suppliers.

In the specific operation, a complete proforma invoice must include the payment method (T / T, L / C, T / T plus L / C, collection payment, etc., which also needs to specify the deposit and the remaining amount), Port of destination, information about the goods.