A client asks for "a proforma" for their bank, a grant application or a public buyer's procurement team. The document looks like an invoice, carries your prices and your letterhead, but it is not an invoice. A proforma invoice is a priced offer presented in invoice form, and handling it properly avoids two common mistakes: counting it as revenue, or forgetting to issue the real invoice afterwards.
What a proforma is for
A proforma meets one specific need: showing someone else what the purchase will cost, before it happens. Clients ask for one for:
- a loan or grant application, where the lender wants to see the exact cost of what is being bought;
- a public body or large company, whose procurement team commits spending based on the proforma;
- an import, to prepare customs formalities or a payment abroad;
- an advance payment, when the client wants to pay before delivery and needs a priced document.
In many countries, especially across Africa and the Middle East, the proforma is a routine document, sometimes required before any purchase order is raised.
What it contains
A proforma carries almost everything an invoice does:
- your details and the client's;
- the words "Proforma invoice", clearly visible;
- its own reference and a date;
- a precise description of the goods or services, quantities and unit prices;
- any taxes and the total;
- how long the offer is valid;
- payment and delivery terms.
The word "proforma" is the most important part: it stops the document being mistaken for an invoice.
How it differs from a real invoice
| Point | Proforma invoice | Invoice |
|---|---|---|
| Timing | Before the sale | After the sale or service |
| Numbering | Own reference, outside the sequence | Next number in the sequence |
| Accounting value | None | Recorded as revenue |
| Purpose | Inform, support financing | Record the sale, request payment |
| What follows | A real invoice | Nothing, it is final |
Never give a proforma a number from your invoice sequence: you would create a gap or a duplicate in your numbering.
Proforma or quote?
Both are priced offers, and their content is often very similar. The difference is mainly who they are for:
- a quote is for the client, who accepts and signs it;
- a proforma looks like an invoice and is often meant for a third party: the bank, the public body, customs.
Many businesses send a quote first, then a proforma based on the accepted quote when the client needs it for financing. What matters is that the amounts match. For writing the quote itself, see our guide to writing a quote.
After the proforma: the real invoice
When the sale happens or the work is done, issue a normal invoice, with its number in your sequence and all the usual details listed in our guide to what to put on an invoice.
If the client paid an advance based on the proforma, record it and deduct it on the final invoice, as described in our article on going from accepted quote to invoice.
Mistakes to avoid
- Leaving out the word "proforma": the client or their accountant may treat it as an invoice.
- Changing prices between proforma and invoice without saying so: the financing file no longer matches the real spend.
- No validity date: an old proforma can resurface months later at outdated prices.
- Never issuing the invoice: the proforma does not support your revenue.
Summary
| Question | Answer |
|---|---|
| Who asks for it? | A client who must convince a third party |
| When? | Before the sale |
| Numbered like an invoice? | No |
| Followed by? | A normal invoice |