Commercial vs. pro forma invoices: Which to use and when.
Learn the difference between a pro forma invoice and a commercial invoice to understand which one works for your individual business, how best to use it, and when it should be sent.
Pro forma and commercial invoices are most often used in global trade. Basically, the main distinction is that one is used as an estimate, and the other as a request for final payment. A pro forma is used before goods are shipped and no payment is required. A commercial invoice is sent after the goods have been delivered and now, it is time to pay.
Tell me about pro forma invoices.
“Pro forma” means “as a matter of form” and is the term used for an invoice that estimates the price or goods of services in advance of shipment or delivery. You can issue a pro forma in situations where it’s impossible to give your customers an exact price, but you’re still able to give them a general idea of the costs involved.
If you import goods as part of your business, you can use a pro forma to estimate their value for customs clearance, but you’ll still need to supply a commercial invoice within 180 days.
When do I use a commercial invoice?
Because commercial invoices are documents issued after goods have been shipped or delivered, once the sale is completed, it serves as a legal record of the transaction.
This type of invoice also contains substantially more detail than a pro forma, including information about the buyer and seller, purchase location, and a complete description of the goods. Plus, if you’re dealing with international shipments in your business, the use of a commercial invoice is actually required.
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