A proforma invoice is widely used in larger companies who have a supply chain. A proforma is a reflection of what the final invoice will be in order for it to receive approval prior to payment of the actual invoice. Using a proforma as part of your purchasing process can speed up the payment process.
Unlike an invoice a proforma isn’t a demand for payment. There is no legal obligation for a proforma to be paid as it’s simply just a warning of the payment to be made upon the receipt of the invoice.
What do I include in a proforma?
The layout of a proforma is similar to that of an invoice apart from there’s no due date or invoice number required. Here’s what you need to include:
Your Logo
The date
Your Business Name
Your clients business name
Your clients address
A description of the goods/services
Total amount
VAT if applicable
Delivery charges if applicable
At the point in which you send your proforma to the client you can include your payment terms and an explanation that the invoice will follow at a later date.
Is a proforma not the same as a quotation?
A quotation is different to a proforma as it’s only a cost based upon an enquiry, not an actual commitment to order the goods or services. A quotation may be an estimate of the cost whereas a proforma reflects the value of the final invoice.
If you’re dealing with larger companies you may get asked to produce a proforma and now you know what it is and why it’s used.
If you have any other queries about your payment processes then I’d love to hear from you.
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