What is a Proforma Invoice and How is it Prepared?

  • Date :August 12, 2026

This document explains the purpose of a proforma invoice and compares it to a commercial invoice using a comparative table. It lists the essential information that a proforma invoice should include (HS code, Incoterms, payment terms).

What is a Proforma Invoice and How is it Prepared?

A proforma invoice is a document provided by a seller to a buyer for preliminary information regarding a sale that has not yet been finalized, detailing the product, price, quantity, and delivery terms. It is not a formal accounting document. In international trade, proforma invoices are frequently used by buyers for evaluating offers, opening letters of credit, or applying for import permits.

What is a Proforma Invoice Used For?

  • The company provides the buyer with a clear price and terms offer before placing the order.
  • It is used as the first document to be presented to the bank when opening a letter of credit (LC).
  • It serves as a reference document for the importer's applications for necessary permits/licenses in their own country.
  • It provides pre-order agreement between buyer and seller.

The Difference Between a Proforma Invoice and a Commercial Invoice

Criterion Proforma invoice Commercial invoice
When is it organized? Before ordering, during the quotation phase After shipment, at the final sales stage.
Legally binding It does not create a payment request. This is a payment request and collection document.
Accounting record Not accounted for It enters the accounting records.
Intended use Proposal, letter of credit application, authorization processes Customs declaration, payment collection

Information Required on a Proforma Invoice

  1. Seller and buyer information (title, address, tax number)
  2. Product description, HS code, quantity, and unit price.
  3. Total amount and currency
  4. Delivery terms (Incoterms — e.g., FOB, CIF)
  5. Payment terms (cash, letter of credit, deferred payment, etc.)
  6. Offer validity period
  7. Estimated delivery/shipping time

Frequently Asked Questions

Can payment be requested with a proforma invoice? No, a proforma invoice is not a payment request document; it is for offer and information purposes only. A commercial invoice is issued for payment collection.

Is a proforma invoice mandatory to open a letter of credit? Generally yes; banks request a proforma invoice as a reference for product and price information when opening a letter of credit.

Are proforma invoices and offer letters the same thing? While they have similar functions, proforma invoices have a more standardized format and content (HS code, Incoterms, etc.), while offer letters can have a more flexible format.

Can the price change after a proforma invoice is issued? The price generally remains fixed during the validity period specified in the proforma invoice; after this period, it may be readjusted according to current market conditions.

Why is a proforma invoice required for an import permit? Customs and related institutions use the proforma invoice as a reference document in the application process to obtain preliminary information about the nature, value, and origin of the product to be imported.

This content was prepared by the GoTradeGo team. If you would like support from an international trade expert in preparing proforma invoices or international trade documentation processes, you can access the relevant profiles on gotradego.com .