The clearest difference between an invoice and a proforma invoice is that a proforma is not an official invoice at all. It looks like one, it lists the same goods at the same prices, and it is laid out the same way — but it does not ask anybody for money and it does not belong in your accounts.
It is a statement of intent: this is what the shipment will contain, and this is what it will cost.
What it is for
A proforma invoice usually turns up at one of two moments.
Before the goods move, so the paperwork can be arranged. Import and export both need customs clearance documents, and those documents need a declared value for the shipment. A proforma supplies it. In some countries it is also what an import or export licence is issued against — not every country requires this, but where it is required, nothing ships without it.
Right after an offer is accepted, to request a payment in advance. You have agreed the deal, and the supplier wants money up front before production or dispatch. Sending a real invoice at that point would be wrong — nothing has been delivered — so a proforma goes instead.
What it does not do
This is where proformas most often go wrong in an administration.
- You do not pay it as an invoice. Any payment made against it is an advance, not the settlement of a debt.
- It does not go into your bookkeeping. It is not a source document.
- You cannot deduct VAT on it. That right attaches to the real invoice.
After the advance is paid and the goods are supplied, the real invoice follows. That is the one you record, and that is the one your VAT deduction rests on.
What it looks like
Structurally a proforma is the invoice with two differences:
- The title says “proforma invoice”, conspicuously, at the top. This is the whole safeguard — it is what stops the document being paid, filed and deducted as though it were the real thing.
- The carrier and the date of shipment are not on it, because at the point a proforma is issued neither has been settled.
Everything else is familiar: your company details, the customer, the lines with quantities and unit prices, the VAT rates, and the total.
Making one
In Invoice Office a proforma invoice is a document type of its own, with its own proforma number and its own design — so it can never be confused with your sales invoices, and the wording on it is yours to set. Finalizing one creates no financial data and no journal entries, which is exactly right: it never touches your books or your VAT return.
You rarely have to build one from scratch. The Action menu on an invoice, an order confirmation or a packing note creates the proforma with the customer, lines, prices and VAT rates already carried across — and the proforma converts onward into the real invoice the same way, so what you proposed is what you bill.
Have a look at the invoice example for the anatomy of the document it is modelled on, or go straight to proforma invoices for the feature set.
Related reading: when do I need to use a proforma invoice and create an invoice.