What Is a Pro Forma Invoice?

What is a pro forma invoice?

A pro forma invoice is usually sent before the final invoice. It gives the customer a detailed estimate of what they are expected to pay if the order, project, or service goes ahead.

Businesses often use pro forma invoices when a customer needs formal pricing information before confirming an order, arranging payment, or receiving goods.

Unlike a standard final invoice, a pro forma invoice is normally used as an informational document rather than the final request for payment.

What does pro forma invoice mean?

The meaning of a pro forma invoice is essentially a proposed invoice. It presents the expected details of a transaction before the final commercial document is issued.

It may look very similar to a normal invoice because it can include customer information, item descriptions, quantities, prices, taxes, delivery charges, and the expected total.

The important difference is that the figures and transaction details may still be subject to confirmation before the final invoice is created.

When do businesses use pro forma invoices?

Businesses use pro forma invoices when they need to provide more detail than a simple verbal price or basic estimate but are not yet ready to issue the final invoice.

Common situations include:

• providing formal pricing before an order is approved
• confirming the expected cost of goods or services
• helping customers arrange internal purchase approval
• showing expected taxes or delivery charges
• providing transaction information before goods are shipped
• allowing a customer to review costs before committing

What should a pro forma invoice include?

A professional pro forma invoice should clearly explain the proposed transaction so the customer can understand what they are expected to receive and how the total has been calculated.

Typical information includes:

• business name and contact details
• customer name and billing information
• document date
• reference number
• description of goods or services
• quantities
• rates or unit prices
• tax information where applicable
• delivery or additional charges
• expected total
• payment or validity terms

Pro forma invoice vs final invoice

A pro forma invoice and a final invoice can contain much of the same information, but they are used at different stages of a transaction.

The pro forma invoice is normally sent first to show the expected cost. The final invoice is then issued when the transaction reaches the point where payment is formally requested.

A final invoice should reflect the actual goods or services supplied, any confirmed changes, payments already received, and the final amount due.

Pro forma invoice vs quote

A quote and a pro forma invoice can both provide pricing before work begins, but they are often presented differently.

A quote normally focuses on the proposed price and scope of work. A pro forma invoice often looks more like a completed invoice and may include detailed customer information, quantities, taxes, payment information, and expected totals.

Which document is more suitable depends on the type of transaction and what information the customer needs before approving the work or purchase.

Pro forma invoice example

A simple pro forma invoice example could be used by a business preparing to supply equipment to a customer.

The document might show:

• 10 units of equipment at £100 each
• Subtotal of £1,000
• Delivery charge of £50
• Applicable tax
• Expected total due
• Price validity period
• Proposed payment terms

Why pro forma invoices are useful

Pro forma invoices give customers a clear preview of the transaction before the final invoice is issued. This can reduce confusion about prices, quantities, taxes, and additional costs.

They are also useful for businesses because they create a written record of the proposed transaction and make it easier to move from initial pricing to final billing.

When both parties understand the expected charges before the transaction is completed, there is less chance of disagreement when the final invoice is sent.

Can a pro forma invoice be changed?

Because a pro forma invoice is normally issued before the transaction is final, the information can often be updated if the scope, quantity, price, delivery cost, or other details change.

Once the final details have been agreed, the business can create the final invoice using the confirmed information.

Keeping the final invoice consistent with the agreed pro forma invoice makes it easier for the customer to review and approve payment.

Create a professional invoice after approval

Once the customer has accepted the proposed transaction and the final amount is known, a standard invoice can be created to request payment.

InvoiceAtlas allows you to enter your business details, customer information, item descriptions, quantities, rates, taxes, discounts, payment terms, and final balance before downloading the completed invoice as a PDF.