Often used for commercial purposes in international transactions, it’s a typical document in global trade. However, it possesses some subtle but important differences from the Commercial Invoice, and getting to know them can assist you on preventing forthcoming hassles.
What Is a Proforma Invoice?
The proforma invoice is a commercial document often used in international transactions. It is basically a preliminary bill of sale (or commercial invoice) provided by an exporter, prior to a sale/shipment. In this document the seller will be informing the buyer on the most important information for shipping: the price, kinds and quantities of goods and usually includes the seller’s bank details to request payment. Some other specifications can be included, such as the weight, size, and other cargo’s details. It not only acts as a contractual offer (which may be accepted by buyer´s transmission of a purchase order), but it is also intended to be exactly reproduced in the final commercial invoice, so that the buyer receives no surprises as regards, either the goods or the price.
In most countries the Proforma Invoice is required for issuing an import license or a foreign exchange allowance. If a letter of credit is the case, this document is frequently used to inform the buyer of the total amount for which the letter of credit has to be opened.
What Is the Difference Between the Proforma Invoice and Commercial Invoice?
These are very similar documents and very often interpreted as if they were the same. Nevertheless, there are some slight differences and it is important to get to know them so that you can evade future hassles.
Well, the main difference may be that the final quantity on the Commercial Invoice can be different. Furthermore, the quantity of products requested (from the Proforma Invoice) is often different to the actual quantity of goods that have been shipped (Commercial Invoice), but this is commonplace in the international trade realm. On the other hand, this difference in quantity of products supplied can be due to many reasons. Undoubtedly, the most usual is because suppliers can have manufacturing issues. Other reason is that the suppliers did not correctly plan how many products would actually fit inside shipping containers.
So, after shipping the cargo, buyers, Freight Forwarders and Customs will require a set of shipping documents for clearing the goods into the country of import. Then, the seller will provide the buyer with a “set” of shipping documents. This includes a Bill of Lading, Commercial Invoice, Packing List and any other shipping documents which might be required.
Ultimately, both (Proforma and Commercial Invoice) are commercial documents and can be used for the very beginning of the transaction. However, the Proforma Invoice does not claim legal appraisal. Just the Commercial Invoice is considered of legal value.
Information for Including on Your Proforma Invoice
- Exporter/seller information (name, address, phone number, etc.);
- Importer/buyer information (name, address, phone number, etc.);
- Method of dispatch – road, rail, air or sea freight;
- Type of shipment – FCL, LCL, Breakbulk or other;
- Port of loading (POL) and Port of discharge (POD);
- Reference number and date;
- Delivery date
- Terms of payment
- Product descriptions – including item codes, product descriptions, Unit Quantity, Unit Type, Price etc.;
- INCOTERM – FOB, FCA, EXW, etc.;
- Any additional information about the cargo;
- Bank details (the Proforma Invoice can include bank details requesting the buyer to make a payment);
- Name, date and signature of authorized company representative.