Proforma invoice: what it is and how to make one

What a proforma invoice is

A proforma invoice is a preliminary invoice. It looks like an invoice and shows what the final invoice will say: the goods or services, quantities, prices, any tax, the total and how to pay. The difference is that you send it before the sale is complete, because something has to happen first. Your buyer may need to pay in advance, arrange financing or an import, or get the purchase approved inside their own company, and each of those needs a document with the real figures on it. The proforma is that document: a request for payment on terms you've already agreed, not a record of a sale. The real invoice follows once the goods or work are delivered or paid for, and that is the invoice both of you keep.

The name comes from the Latin "pro forma", roughly "as a matter of form", and you'll see it written as proforma, pro forma or pro-forma. All three mean the same document. Because a proforma previews the final invoice, it should match that invoice as closely as you can make it, so the buyer pays the right amount now and isn't surprised when the real invoice arrives. If the two documents disagree, the buyer's accounts team has to work out which one is right, and that is exactly the delay a proforma is meant to avoid.

When to use a proforma invoice

The most common reason is payment in advance. A joinery workshop that has agreed to build a fitted kitchen may want the money, or a deposit, before it orders the timber. A freelance developer may ask a new client to pay for a $3,000.00 project before the work starts. In both cases the buyer needs a proper document to pay against before anything has been delivered. The proforma shows the whole job and the amount due now, and the real invoice follows once you've delivered or the buyer has paid.

The second reason is the buyer's own purchasing process. Larger companies often can't spend money without a supplier document that shows the items and the total, because someone has to approve the cost, raise a purchase order or schedule the payment. A proforma fits into that process. It gives the accounts team the figures they need, it's clearly marked as not the final invoice, and once they've paid or the goods or services have arrived, you send the real invoice for their records.

The third reason is selling goods abroad. An overseas buyer may pay through a letter of credit, which is a promise from their bank to pay you once you present the agreed shipping documents, and the bank will want to see the value of the order before it issues one. In some countries the importer also needs a proforma to apply for an import permit, or to buy the foreign currency to pay you. If a hotel group abroad orders 60 oak chairs at £145.00 each, your proforma tells its bank that the order is worth £8,700.00 before a single chair leaves the workshop.

Proforma vs quote, final invoice and commercial invoice

A quote, sometimes called an estimate, is an offer. It tells a possible customer what you would charge, often with options or an expiry date, and they're free to accept it, ask for changes or walk away. A proforma comes after that conversation, when the price and terms are agreed and you're asking to be paid on them. The usual order is a quote first, then a proforma if payment comes before delivery, and finally the invoice. If you're still pricing a job, the free quote template is the document you need, and the guide to quotes and invoices explains where one ends and the other begins.

The final invoice is the real thing. It records the sale and carries the next number in your invoice series, and if you're VAT registered, it's your VAT invoice. A proforma is not a tax or VAT invoice and doesn't go into either side's books as a sale. That is why you still issue the real invoice, even when the buyer has already paid. When money comes in before you deliver, issue the real invoice then rather than waiting until the work is done, so the payment you've received is matched by an invoice in your books. If you're VAT registered, ask your accountant how to invoice a deposit before you take one. For what makes a document an invoice, and what that invoice is for, see what an invoice is.

A commercial invoice belongs to exporting. It's the document that travels with a shipment of goods across a border, and customs in the destination country use it to check what's being imported and to work out any duty. So it describes the goods in more detail than most invoices do: what they are, where they were made, how many there are and what they're worth. A proforma comes earlier, before the goods ship, and tells the buyer and their bank what the commercial invoice will show. Couriers sometimes ask for a "proforma invoice" with a parcel that isn't a sale at all, such as free samples, so follow your courier's or freight forwarder's instructions for shipping paperwork. The maker makes proformas and invoices, and switching on the customs details turns an invoice into a commercial invoice, with HS codes, origin and weights; it doesn't make other customs forms.

What to put on a proforma invoice

Because a proforma previews the final invoice, it carries the same details, plus a few that only matter before a sale is complete. The checklist below is a practical one rather than a legal one. It covers what buyers, their banks and their accounts teams expect to see, and you can check your proforma against it before you send it.

• The title "Proforma invoice", clearly, so nobody takes it for the final invoice
• Its own reference number and the date you issue it
• Your business name, address and contact details, and the buyer's name and address
• A description of the goods or services, with the quantity, unit price and line totals
• Any VAT or sales tax the final invoice will charge, and the total to pay
• The payment terms: how much is due now, by when, and when any balance is due
• Your payment details, such as your bank account or another way to pay
• When you expect to deliver, and how long the prices hold
• A line saying it is not the final invoice, or not a VAT invoice

The number matters more than it seems. The buyer needs a reference to put on their payment so you can match the money to the order, but the proforma shouldn't use up a number from your invoice series. The UK rule for invoices shows why: Every invoice needs a unique identification number, and a VAT invoice needs a sequential number, from one or more series, that uniquely identifies it. If proformas took numbers from that series, every order that fell through would leave a gap in it. It's cleaner to give proformas a series of their own, and the guide to invoice numbers covers numbering in more detail.

Show tax exactly as the final invoice will, so the amount the buyer pays now is the amount they would have paid anyway. Take a VAT-registered workshop asking £6,000.00 for a job taxed at the standard rate of 20%. It adds £1,200.00 of VAT and asks for £7,200.00. A seller whose final invoice will carry no VAT, because they aren't registered, shows none on the proforma either. In the US, add sales tax only on the lines that will be taxed on the final invoice, at the rate that will apply there.

The terms and dates are what make a proforma useful rather than just polite. A note such as "Payment in full before we order materials; delivery within four weeks of payment" tells the buyer what they're paying for and when they'll get it. A date until which your prices hold protects you if the buyer takes months to pay while your costs go up. The closing line saying it isn't the final invoice protects both of you, because it tells the buyer's accounts team that the document for their records is still to come.

From proforma to invoice in the maker

The button on this page opens the maker with a proforma already selected, and you don't need an account to make one and download the PDF. Proformas work much like invoices in the maker, with a few differences that keep them apart from your real invoices. The steps below take you from a blank proforma to the final invoice.

1. Fill in your business details, which the maker keeps for next time, and the buyer's name and address. The proforma gets a number from its own series, PF-1, PF-2 and so on, so your invoice numbers aren't touched.
2. Add the lines with quantity, unit (hours, days, pieces …) and price, and set the VAT or sales tax rate for each line. If the buyer has given you a purchase order number, add it as a custom field.
3. Choose how you want to be paid: bank transfer, a PayPal link, or for US businesses a check, Venmo, Zelle or Cash App. Write the payment terms, the delivery date and how long your prices hold in the notes.
4. Download the PDF, or print it, and send it to the buyer. The PDF carries the line "This is not a VAT invoice." in the invoice's language. Mark the proforma as sent, and as paid when the money arrives.
5. When you deliver, or when a payment comes in, open the proforma and choose "Create invoice from this". You get a new invoice with the same client, lines and prices and the next number in your invoice series.

The new invoice copies the full amount of the order. If the buyer has already paid in full against the proforma, say so on the invoice, for example in the notes: "Paid in full on 4 March by bank transfer against proforma PF-3, with thanks", and mark the invoice as paid, so the buyer's accounts team doesn't take it for a second bill.

A deposit is different, because only part of the money has come in, and the maker doesn't subtract it for you. You can keep the full amount on the invoice and write in the notes what you have received and what is still due, such as "Deposit of $1,000.00 received on March 4 (PF-3); balance due: $2,000.00". Or you can reduce the lines to the deposit when it arrives and make a second invoice for the balance when you deliver. Which of the two your tax rules expect, and when, differs between countries, so if you are registered for VAT or sales tax, ask your accountant once and then follow the same pattern every time.

Proformas have their own tab in the overview and are never counted in your invoice totals or the VAT summary, which matches what they are: requests for payment, not sales. If you've already sent a quote for the job, duplicate it and switch the copy to a proforma in the document menu, so the quote stays on file as the buyer accepted it. If a buyer asks for wording of their own, such as "Final invoice to follow on delivery", put it in the notes.