What is a Proforma Invoice?

A proforma invoice is a document that is used as a preliminary invoice, usually sent to a customer before the final invoice is issued.

It is a common practice in international trade, and it serves as a commitment from the seller to provide the goods or services described in the invoice, at the price stated. In this blog post, we will explore what a proforma invoice is, its purpose, and how it differs from a commercial invoice.

What is a Proforma Invoice?

A proforma invoice is a document that acts as a preliminary invoice and is used to confirm the details of a sale before the final invoice is issued. It is typically used in international trade, where the buyer and seller need to confirm the details of the transaction before the goods are shipped. The proforma invoice includes information such as the type and quantity of goods, the price, and the terms of the sale.

Purpose of a Proforma Invoice

The primary purpose of a proforma invoice is to provide a commitment from the seller to provide the goods or services described in the invoice, at the price stated. It also serves as a way for the buyer to confirm the details of the transaction and to make sure that the goods or services being purchased meet their expectations.

In addition, a proforma invoice can also be used for the following purposes:

  • To secure financing from banks or other financial institutions
  • To apply for import or export licenses
  • To facilitate customs clearance
  • To obtain a letter of credit from the buyer

Difference between Proforma Invoice and Commercial Invoice

A proforma invoice is different from a commercial invoice in several ways. A commercial invoice is a document that is issued after the goods have been shipped, while a proforma invoice is issued before the goods are shipped.

A commercial invoice includes more detailed information, such as the weight and dimensions of the goods, the freight and insurance charges, and the terms of the sale. A proforma invoice, on the other hand, includes less detailed information and is not considered a legal document.

In conclusion, a proforma invoice is a useful tool for buyers and sellers in international trade, as it serves as a preliminary invoice and a commitment from the seller to provide the goods or services described in the invoice, at the price stated. It is also used for various purposes such as securing financing, obtaining licenses, and facilitating customs clearance. It is important to note that a proforma invoice is not a legal document, unlike a commercial invoice which is issued after the goods have been shipped.

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