What Is A Pro Forma Invoice?
If you’re a business owner, chances are you’ve heard of pro forma invoices before. But what exactly is a pro forma invoice? A pro forma invoice is an estimated invoice created by a seller to present price and other details about a proposed sale prior to the actual sale taking place. It serves as a way for buyers to gauge the cost of goods or services before making a purchase. In this blog post, we will discuss what exactly a pro forma invoice is, why it’s important, and how to create one.
What is a pro forma invoice?
A pro forma invoice is a document that provides detailed information about a product or service that a company has provided. This type of invoice typically includes the date of the transaction, the name and contact information of the customer, a description of the product or service, the unit price, the quantity purchased, the total amount due, and any applicable taxes.
How does a pro forma invoice differ from a regular invoice?
A pro forma invoice is different from a regular invoice in several ways. First, a pro forma invoice is typically used as an estimate or quote for goods or services, rather than an actual bill. Second, a pro forma invoice may not include all the same information as a regular invoice. For example, a pro forma invoice may not include terms of payment or shipping information. Finally, a pro forma invoice is usually not binding on the buyer or seller.
When is a pro forma invoice used?
A pro forma invoice is typically used in international trade when goods are being shipped. The buyer and seller agree on the terms of the sale, including the price, and the pro forma invoice is issued by the seller as a commitment to provide the goods as agreed. It can also be used to apply for financing, since it serves as a contract between the buyer and seller.
What should be included in a pro forma invoice?
When you send a pro forma invoice to a customer, you are essentially providing them with a quote for goods or services. The invoice should include all the relevant information about what is being provided, as well as the cost. This way, the customer can make an informed decision about whether to go ahead with the purchase.
Included in a pro forma invoice should be:
– A description of the goods or services being offered
– The quantity of goods or services being offered
– The unit price of the goods or services
– The total price of the goods or services
– Any discounts that may apply
– The terms of sale (e.g. payment terms, delivery date)
If you are unsure about what to include in your pro forma invoice, you can always look at examples online or ask your accountant for guidance.
How to create a pro forma invoice in 6 steps
A pro forma invoice is a preliminary bill of sale. It is typically used to give the buyer an estimated cost of the goods or services before the actual purchase is made. The invoice can be used as a negotiating tool, and it can also help the buyer budget for the purchase.
1. Determine what information you need to include on the pro forma invoice. This will vary depending on what you are selling, but it should at minimum include a description of the product or service, the unit price, and the total amount due.
2. Find a pro forma invoice template that you can use, or create your own using a word processing or spreadsheet program.
3. Enter your company name and contact information at the top of the invoice.
4. Include an invoice number, and make sure it is unique for each pro forma invoice you create. This will help you keep track of invoices if you need to reference them later on.
5. Fill in the customer information section with the name and contact information for the buyer.
6. In the Description column, provide a brief description of each item or service being billed. Include any relevant details such as size, color, model number, etc.
7. Enter the unit price for each item in the Unit Price column. If there are multiple items being billed, be sure to include quantity information so that the buyer knows how many they are being charged for.
8. Calculate
Conclusion
In conclusion, a pro forma invoice is an essential document that should be included in any international business transaction. It provides the buyer with important details such as the total cost of goods and services, payment terms, shipping fees and other transaction related information. Knowing what a pro forma invoice is can help you ensure that all your transactions are conducted smoothly and efficiently.