What Is a Proforma Invoice?

A practical definition of proforma invoices, when they are used, and how to create one that clients can approve quickly.

A proforma invoice is a preliminary billing document sent before a sale is finalized. It outlines expected products or services, estimated totals, taxes, shipping costs, and payment terms so a buyer can review and approve the transaction before delivery. In simple terms, it is a pre-sale pricing document, not the final accounting invoice used to record a completed sale in your ledger.

Businesses use proforma invoices when customers need formal documentation for purchase approval, internal budgeting, bank financing, import planning, or customs preparation. Because the document appears invoice-like, buyers can inspect exact line items and compare terms with their purchase order. That clarity reduces disputes and speeds up the handoff from quoting to fulfillment.

When to use a proforma invoice

  • Before shipping goods when the buyer needs itemized pricing in advance.
  • During B2B procurement flows where formal pre-approval is required.
  • For cross-border orders where banks or customs brokers request pre-shipment documentation.
  • When a quote is not detailed enough and the buyer needs tax, freight, or terms visibility.

What to include on a proforma invoice

  • Document title clearly marked as Proforma Invoice
  • Proforma number, issue date, and validity period
  • Seller and buyer names, addresses, and contact details
  • Detailed line items with quantities, unit prices, and subtotal
  • Estimated taxes, shipping, handling, discounts, and final total
  • Payment terms, delivery terms, and notes on scope or assumptions

Proforma invoice vs quote vs final invoice

A quote is usually the earliest pricing signal and can stay high level. A proforma invoice is more formal and typically includes fuller line-level detail, expected tax treatment, and shipment assumptions. The final invoice is issued once goods or services are delivered according to your accounting process and is the document normally used for accounts receivable and payment reconciliation.

If your team needs a ready-to-use format, generate one with our Proforma Invoice Template. You can also compare with the Quote Template and the Invoice Template.