Billing
What is a Proforma Invoice and When Do You Send One?
May 10, 2026 4 min read
In international trade and complex services, you may hear the term "proforma invoice." Far from being a standard invoice, a proforma is a helpful pre-delivery document that acts as an estimate of costs before order processing. Let’s learn how it functions.
Understanding Proforma
A proforma invoice is a preliminary bill of sale sent to buyers in advance of a shipment or service delivery. It outlines the items being purchased, their values, shipping specifications, customs information, and payment parameters.
Unlike a standard invoice, a proforma is not a demand for payment. It is also not an official accounting document; it does not change your accounts receivable ledger.
Why Use Proforma Invoices?
- Import Custom Clearances: Essential for international shipments so border authorities can calculate custom duties and taxes before arrival.
- Financing and Loans: Clients often present proforma invoices to banks to secure business loans or letters of credit.
- Establishing Mutual Agreement: Serves as a formal quote detailing terms so the client can approve before production begins.