The Complete Guide to Invoicing for Small Businesses
Pro forma invoice: what it is and when to use it
A pro forma invoice looks like a bill but usually precedes shipment or final approval. It helps buyers secure budgets, import permits, or internal purchase orders before you recognize revenue.
Pro forma vs quote vs final invoice
A quote promises a price range or fixed bid. A pro forma invoice states line items and totals as if the sale is proceeding—often to trigger payment or customs clearance. The final tax invoice confirms what was actually delivered and may adjust quantities or tax.
What to include so finance teams accept it
Label the document “Pro forma” prominently. Show seller and buyer legal names, currency, Incoterms for international shipments, line items, subtotals, taxes if estimated, and payment instructions. Reference the underlying contract or PO when one exists.
Converting to a final invoice
When goods ship or milestones complete, issue the final invoice with the same structure. Carry forward invoice numbers logically—some teams use a suffix or a new sequence. Credit any differences with a credit memo instead of silent edits.
Pro forma invoice FAQ
- Is a pro forma invoice legally binding?
- It signals intent and pricing but is not a substitute for contract terms. Final liability follows your agreement and local law.
- Do I charge tax on a pro forma?
- Follow jurisdiction rules—some regions require tax estimates on imports; others tax only on the final invoice.
- Can customers pay against a pro forma?
- Often yes for deposits or prepayment, but confirm with your processor and document what happens if scope changes.