What is a pro forma invoice? How and when to use it

Published Thursday 2 April 2026

Table of contents

• What is a pro forma invoice?
• How is a pro forma invoice different from other invoices?
• When to send a pro forma invoice
• Why businesses use pro forma invoices
• What should a pro forma invoice look like?
• How to create a pro forma invoice
• Streamline your invoicing with Xero
• FAQs on pro forma invoices

Key takeaways

• Use pro forma invoices only after agreeing on terms with customers but before finalising the sale, particularly when buyers need documentation for financing, customs clearance, or internal procurement approval.
• Label your document clearly as "Pro Forma Invoice" and keep it separate from your accounting records since it creates no payment obligation and shouldn't be recorded as income until the sale is confirmed.
• Include all essential details like buyer and seller information, product descriptions, quantities, prices, and terms, but use a reference number rather than your official invoice numbering sequence.
• Wait for customer confirmation before processing orders or shipping products, as pro forma invoices are preliminary estimates that can still change before the final transaction.

What is a pro forma invoice?

A pro forma invoice is a preliminary bill of sale sent to a buyer before a transaction is final. It outlines the products and prices involved but isn't a request for payment.

Unlike a standard invoice, a pro forma invoice has no invoice number or due date. You don't record it in your accounts receivable because no money is owed yet.

How is a pro forma invoice different from other invoices?

Understanding how a pro forma invoice differs from similar documents helps you use the right one at the right time.

Pro forma invoice vs sales invoice

A sales invoice is a formal request for payment sent after a transaction is complete. It creates a legal obligation for the buyer to pay.

A pro forma invoice is sent before the sale is final. It has no due date and doesn't obligate the buyer to pay.

Key difference: A sales invoice records income in your accounts; a pro forma invoice doesn't.

Pro forma invoice vs commercial invoice

A commercial invoice is used in international trade to finalise a sale between importers and exporters. According to the International Trade Administration (ITA), commercial invoices are always required when importing goods into the United States.

A pro forma invoice can estimate customs duties and fees but doesn't finalise anything, and in cases where a commercial invoice cannot be produced, it is considered acceptable by Customs and Border Protection (CBP).

Key difference: A commercial invoice confirms a completed sale; a pro forma invoice is a preliminary estimate.

Pro forma invoice vs quote

A quote is used during negotiations to propose prices before any agreement is reached.

A pro forma invoice is typically sent after a deal is agreed but before the sale is processed. It supports administrative tasks like financing, customs, or procurement approval.

Key difference: Quotes come before agreement; pro forma invoices come after agreement but before final invoicing.

When to send a pro forma invoice

Send a pro forma invoice when a customer requests one to support their internal processes. This typically happens after you've agreed on terms but before the sale is finalised.

Common scenarios for sending a pro forma invoice:

• After quote acceptance: The customer has agreed to your quote and needs formal documentation.
• For financing purposes: The buyer needs to secure funding or credit approval.
• For customs clearance: An importer requires documentation to estimate duties and fees.
• For procurement approval: A corporate customer needs to satisfy internal purchasing requirements.

When not to send a pro forma invoice:

• Don't use it as a replacement for a quote during price negotiations
• Don't treat it as a final invoice or expect payment from it
• Don't record it in your accounting system as income

The sale isn't final until you receive confirmation. Wait for your customer's approval before processing the order, shipping products, or issuing the official sales invoice.

Why businesses use pro forma invoices

Customers and business partners request pro forma invoices for several reasons:

• Financing arrangements: Buyers use pro forma invoices to confirm order costs and secure funding before purchase.
• Customs clearance: Importers need pro forma invoices to declare the value of goods, as some countries require this documentation for clearance. The scale of this process is immense; in 2022 alone, the US imported $3.35 trillion in goods.
• Procurement compliance: Corporate customers often require pro forma invoices as part of their internal approval process because they're more formal than quotes.

What should a pro forma invoice look like?

A pro forma invoice looks like a regular invoice but must be clearly labelled "Pro Forma Invoice" at the top. It includes the same core information without creating a payment obligation.

Every pro forma invoice should include:

• Document label: "Pro Forma Invoice" displayed prominently
• Reference number: A tracking number for easy retrieval (not an official invoice number)
• Buyer and seller details: Names, addresses, and contact information
• Product or service list: Descriptions, quantities, and individual prices
• Total amount: The estimated cost of the transaction
• Terms of sale: Payment terms, delivery conditions, and validity period

For international transactions, you may also need to add:

• Weights and measurements: Product dimensions and shipping weight
• Shipping costs: Freight, insurance, and handling fees
• Country of origin: Where goods were manufactured

How to create a pro forma invoice

Creating a pro forma invoice takes just a few steps. The key is ensuring it's clearly labelled and kept separate from your official invoicing.

1. Start with a standard invoice template: Use your regular invoice format or download a free invoice template as your starting point
2. Label it clearly: Add "Pro Forma Invoice" prominently at the top so your customer knows it's not a payment request
3. Add a reference number: Include a tracking number for easy retrieval, but don't use your official invoice numbering sequence
4. Complete all required fields: Include buyer and seller details, product descriptions, quantities, prices, and terms
5. Keep it out of your accounts: Don't enter the pro forma invoice in your accounts receivable ledger since no money is owed yet. This practice aligns with accounting principles. Under US GAAP, revenue is only recognised when a contract begins and payment is expected.
6. Send for customer review: Share the document and wait for confirmation before processing the sale

Check how your accounting software handles pro forma invoices. In Xero, you can create quotes or draft invoices using the invoice generator without triggering income recognition, keeping your books accurate until the sale is confirmed.

Streamline your invoicing with Xero

Pro forma invoices help you keep customers informed, support their financing and procurement processes, and close deals more easily. The key is creating them quickly and accurately without disrupting your accounting records. Over 40 countries have introduced some form of mandatory e-invoicing or e-reporting.

Xero makes it easy to manage all your invoicing in one place. Create professional documents, track what's been sent, and keep your books accurate from quote to final invoice.

Ready to simplify your invoicing? Get one month free and see how Xero can help your business.

FAQs on pro forma invoices

Here are answers to common questions about pro forma invoices.

Is a pro forma invoice legally binding?

No, a pro forma invoice is not legally binding. It's a good-faith estimate sent before delivery, not a formal contract or payment demand.

Is it OK to pay a pro forma invoice?

No, you shouldn't pay a pro forma invoice. It's not a binding agreement, and the final price or terms may still change. Wait for an official sales invoice before making payment to ensure accurate record-keeping on both sides.

Can a pro forma invoice be canceled?

Yes, you can cancel or discard a pro forma invoice at any time. Since it's not a legal document or accounting record, there's no formal cancellation process required if the sale doesn't proceed.

Can you turn a pro forma invoice into a commercial invoice?

No, you can't simply convert a pro forma invoice into a commercial invoice. While they share similar information, a commercial invoice requires additional legal and regulatory details for customs, freight forwarders, and banking institutions that a pro forma invoice doesn't include. You'll need to create a separate commercial invoice for international shipments.

What are the advantages of pro forma invoices?

Pro forma invoices offer several benefits for your business:

• Align expectations: Confirm pricing and terms with customers before finalising the sale.
• Support customs clearance: Provide importers with the documentation they need to estimate duties and clear goods.
• Allow flexibility: Make changes to products, services, or costs without affecting your accounting records.
• Expand your customer base: Win business from corporate clients and importers who require formal pre-sale documentation.