it can be defined as a document that provides an accurate description of the material sent or shipped and the relative prices, issued by the exporter / supplier at the request of the importer / buyer before placing the order. Not exactly the same as the proforma invoice, which only for the form, ie n recorded in the books n charged to the recipient's account. It is used to request the buyer to pay for the goods sent to him on credit.
While an invoice indicates the total amount due, for the convenience of the buyer, the proforma invoice is used as a quote or a request for payment, when the company is dealing with a new part or with the part, to which the company does not has no credit preparations. Take a look at this article to know the significant differences between the proforma invoice and the invoice.
|Sense||The proforma invoice similar to a normal invoice, provides information to the agent / buyer regarding the details of the goods still to be delivered.||A commercial tool delivered to the buyer containing details of products or services provided by the seller known as an invoice.|
|Release time||Before placing the order.||Before the payment made.|
|Acceptance||Creating sales||Sales confirmation|
|Objective||To help the buyer make decisions about whether to place an order or not.||To inform the buyer, the actual amount due for payment.|
|Entry in the accounting book||No registration was made, as the invoice is not a real invoice.||An entry made in the books.|
Definition of proforma invoice
A proforma invoice is a commercial pre-shipment document prepared by the seller and delivered to the buyer / agent, to transmit information on the products to be delivered. The tool contains a description of the goods, i.e. quantity, price, weight, type and other specifications. a seller declaration that provides the products and services to the buyer on the specified date and price.
Since the document does not constitute actual sales, therefore no registration is made on the issue of the proforma invoice in the seller's books for the credits and the receipt of the buyer for the accounts to be paid.
The invoice refers to a non-negotiable instrument raised by the seller and delivered to the buyer containing the details of the products or services provided to him. The document is used to request payment from the buyer of goods. Shows the buyer's indebtedness to the seller. The word invoice indicated at the top of the front of the document. It contains the following details:
- Unique number
- Date of issue of the invoice
- Delivery date of the goods
- Product details, ie products, quantities and agreed prices.
- Discount, if applicable, provided by the seller.
- Contact details of the seller and the buyer
- Payment terms, ie date and method.
- Credit terms
- Total amount due for payment.
Key differences between proforma invoice and invoice
The differences between the proforma invoice and the invoice can be clearly expressed for the following reasons:
- A document similar to the normal invoice, which provides information to the agent regarding the details of the goods to be delivered, known as the proforma invoice. On the other hand, the invoice refers to a commercial tool delivered to the buyer containing the details of products or services provided by the seller.
- The invoice proforma a sort of quotation, containing a commitment by the seller for the supply of goods at the specified rate and date. On the contrary, the invoice is a sort of invoice, which shows the amount due to the buyer.
- The proforma invoice is used for the creation of sales, while the invoice is used for the confirmation of the sale.
- The Proforma invoice is provided by the seller, at the request of the buyer before placing the order. Contrary to the invoice, which is issued by the seller to the buyer to request payment for the delivered goods.
- Since the invoice proforma a fictitious invoice and used for the purpose of creating sales, therefore no entry is made in the accounting books for the financial transaction. Unlike the invoice, which is a real invoice and which translates into a financial transaction, therefore, it serves as the basis for the accounting entry in the books of both parties.
- The basic goal of the proforma invoice is to help the buyer make decisions about whether to place an order or not. Otherwise, a seller issues an invoice to request payment from the buyer.
Due to the similarity in the details of both documents, people easily get confused. But the fact that they are different, in the sense that an invoice requires payment by the buyer for the goods delivered to him, while a pro-forma invoice is sent to the buyer at his request, before the goods are shipped.