What is a pro forma invoice and what should it contain?

Pro forma invoices are often misinterpreted and not used enough as people don’t always understand what they should be used for.

A pro forma invoice is an estimated bill so that your client knows what to expect. A pro forma is usually used to approve a payment prior to being invoiced for it. They are mostly used in larger businesses where there is a supply chain involved and a payment approval process in place. Using a pro forma can speed up this process as the client is being warned of the amount and payment details prior to being invoiced. 

It’s important to understand that a pro forma invoice is not a demand for payment, it will not include an invoice number or a due date. There is also no legal obligation for it to be paid.

The layout of a pro forma invoice is very similar to that of a regular invoice. It will need to contain details such as; 

  • Your Logo
  • The date
  • Your Business Name
  • Your clients business name
  • Your clients address
  • A description of the goods/services
  • Total amount
  • VAT if applicable
  • Delivery charges if applicable

You may include your payment terms and may need to refer to the payment being requested via an invoice at a later date.

Is a pro forma invoice the same as a quote?

Even though a pro forma and a quote are very similar they are also very different.

A quote would only be sent to a customer who has made an enquiry and is asking for pricing, whereas a pro forma would be sent to a customer once they have committed to purchasing goods or services. It’s important that a pro forma invoice shows a true reflection of the price that will be contained on the invoice. It doesn’t have to be exact as it is only an estimate but once your customer has committed to buying from you, they don’t want to be hit with any unwanted surprises.

It’s easy to create a pro forma invoice when you know how. Find out more about our layout design training here

27/04/2021

“Any advice relating to accounts or tax should be sought from your tax accountant. Sage Accounts Solutions Limited will not be held responsible for any loss or damage caused as a result of the information contained herein.”

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