What is a pro forma invoice and when should you use it?
Invoicing is complicated — particularly as it applies to how and when to send them. Follow this easy-to-use guide to learn more about how pro forma invoices can help your business.
The world of invoicing can be tricky — even more so, the terminology used in the invoicing world is often confusing. If you’ve never heard the term “pro forma invoice” before, don’t sweat it. Dive into this brief (but helpful) guide to give yourself a better understanding of this type of invoice and how it can benefit you.
What exactly is a pro forma invoice?
A pro forma invoice refers to a type of bill of sale that is sent to someone — a client, an organization, a person, etc. — before the work is completed. This type of invoice can be used for:
- A commitment to goods
- A promise of services
- Internal purchase approval
There are several different uses for these types of invoices, and they have proven to be incredibly helpful for organizations, businesses, and individuals in various industries. As we said, pro forma invoices can be created and used by anyone but most commonly they’re used in trade transactions and imports and exports.
Here are a few important pro forma invoice facts.
- A pro forma invoice is not a true invoice — think of these as confirmations of commitments, not actual invoices set to be paid upon receipt
- A quote and a pro forma invoice are different — you typically send these when a customer has already committed to working with you
- Using a pro forma invoice can help to get you paid promptly because it lets your clients/customers know what they’ll be paying in advance