Pro forma invoice: what it is, when and why to use it

Published Thursday 2 April 2026

Table of contents

• What is a pro forma invoice?
• When and why to use a pro forma invoice
• What should a pro forma invoice look like?
• How is a pro forma invoice different from other invoices (and quotes)?
• How to create a pro forma invoice
• FAQs on pro forma invoices

Key takeaways

• Use pro forma invoices when customers need documentation for financing, customs clearance, or internal procurement processes before finalising a sale.
• Label the document clearly as "Pro Forma Invoice" and include all transaction details, but don't record it in your accounts receivable since it's not a request for payment.
• Send pro forma invoices after a quote is accepted but before the sale is final, and always get confirmation from your customer before processing the order or shipping products.
• Recognise that pro forma invoices aren't legally binding documents and can be cancelled without formal procedures if the sale doesn't proceed.

What is a pro forma invoice?

A pro forma invoice is a preliminary document sent to a buyer before a sale is final. It outlines the products, prices, and terms of the transaction.

Unlike a standard invoice, a pro forma invoice isn't a request for payment. It doesn't include an invoice number or due date, and you don't record it in your accounts receivable.

When and why to use a pro forma invoice

Pro forma invoices serve several key purposes in business transactions:

• Securing financing: Buyers use pro forma invoices to confirm order costs and arrange financing before committing to a purchase.
• Clearing customs: Importers need pro forma invoices to declare the value of goods. Without this document, shipments may be delayed or rejected at customs.
• Meeting procurement requirements: Some customers request pro forma invoices as part of their internal approval process because they're more formal than a quote.

When to send a pro forma invoice: You'll typically send one after a quote has been accepted but before the sale is final. Customers usually request them to support tasks like calculating import duties or satisfying procurement requirements.

If your customer is an importer, ask whether they need a pro forma invoice before you finalise the sale.

The sale isn't complete at this stage. Get final confirmation from your customer before processing the order, shipping products, or issuing the official sales invoice.

What should a pro forma invoice look like?

A pro forma invoice looks similar to a standard invoice but serves a different purpose. Here's an example to guide you.

A pro forma invoice looks like a regular invoice but must be clearly labelled "Pro Forma Invoice" at the top. It should include:

• Buyer and seller details: Names, addresses, and contact information
• Product descriptions: Itemised list of goods or services
• Prices: Unit costs and totals
• Terms of sale: Payment terms, delivery conditions, and any other agreed conditions
• Reference number: A tracking number for easy retrieval (not an official invoice number)

For international shipments, importers may also require weights, measurements, and shipping costs.

How is a pro forma invoice different from other invoices (and quotes)?

A pro forma invoice is often confused with other business documents. The key differences are:

• Sales invoice: A sales invoice requests payment after a transaction is final. A pro forma invoice is sent before the sale, so it doesn't include a due date or create an obligation to pay.
• Commercial invoice: A commercial invoice is used in international trade to declare shipment details for customs and identify applicable tariffs. Unlike a pro forma invoice, it confirms that a sale is complete.
• Quote: A quote proposes prices during negotiations. A pro forma invoice is typically sent after the deal is agreed to support financing, customs, or procurement requirements.

How to create a pro forma invoice

Creating a pro forma invoice takes just a few steps:

1. Start with a standard invoice template or use your accounting software.
2. Label the document "Pro Forma Invoice" clearly at the top.
3. Complete all required fields: buyer and seller details, product descriptions, prices, and terms.
4. Assign a reference number for tracking (this isn't an official invoice number).
5. Don't record it in your accounts receivable ledger. The sale isn't confirmed yet.
6. Send it to your customer for review.

If you're using accounting software like Xero, you can send a pro forma invoice without creating an accounts receivable entry. This prevents the document from being recorded as income before the sale is final.

FAQs on pro forma invoices

Find answers to common questions about pro forma invoices.

Is a pro forma invoice legally binding?

No. A pro forma invoice is a good-faith estimate, not a legally binding document. You create it before delivery, and it doesn't obligate either party to complete the transaction.

Can a pro forma invoice be cancelled?

Yes. Since a pro forma invoice isn't a legal or accounting document, you can simply discard it if the sale doesn't proceed. There's no formal cancellation process required.

Is it OK to pay a pro forma invoice?

No. A pro forma invoice isn't a request for payment, and the final price may change. Wait for the official sales invoice before making any payment.

What are the advantages of using pro forma invoices?

Pro forma invoices offer several benefits:

• Clarity: They confirm pricing and terms so both parties agree before the sale.
• Customs compliance: They provide the documentation importers need to clear goods through customs.
• Flexibility: You can adjust products, services, or costs without affecting your accounting records.

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

No. While both documents contain similar information, a commercial invoice includes additional legal and regulatory details required for international trade. You'll need to create a separate commercial invoice with the appropriate terms for customs, freight, and banking purposes.