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

Published Monday 30 March 2026

Table of contents

• What is a pro forma invoice?
• Three common reasons for issuing a pro forma invoice
• How is a pro forma invoice different from other invoices (and quotes)?
• When to send a pro forma invoice
• What should a pro forma invoice look like?
• How to create a pro forma invoice
• Simplify your invoicing with Xero
• FAQs on pro forma invoices

Key takeaways

• Send a pro forma invoice only after your customer accepts a quote but before the sale is final, as it helps buyers secure financing, clear customs, or meet procurement requirements without creating a payment obligation.
• Label your document clearly as "Pro Forma Invoice" at the top and use a separate reference number system to avoid confusing it with official sales invoices that trigger accounting entries.
• Include all essential details like seller and buyer information, itemised products or services, pricing, and terms of sale, but keep the document out of your accounts receivable since no sale has occurred yet.
• Recognise that pro forma invoices aren't legally binding and can be cancelled at any time, so always wait for final customer confirmation before shipping products or issuing official sales invoices.

What is a pro forma invoice?

A pro forma invoice is a preliminary document sent to a buyer before a sale is final, outlining the products, services, and prices involved in a proposed transaction. In some cases, such as for U.S. customs, a pro forma invoice may be filed as part of the entry documentation if the original commercial invoice isn't available.

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 it's not recorded in your accounts receivable.

Three common reasons for issuing a pro forma invoice

Businesses issue pro forma invoices for several key reasons:

• Financing arrangements: Buyers use pro forma invoices to confirm order costs and secure funding before completing a purchase.
• Customs clearance: Importers need pro forma invoices to declare the value of goods at customs, as some countries mandate that you submit a pro forma invoice before granting an import licence or clearing shipments.
• Procurement requirements: Corporate buyers often require pro forma invoices as part of their internal approval process because they're more definite than quotes.

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

A pro forma invoice is often confused with other business documents. Here's how they differ:

• Sales invoice: A sales invoice requests payment after a transaction is complete. It includes a due date and creates an accounts receivable entry. A pro forma invoice is sent before the sale is final and doesn't request payment.
• Commercial invoice: A commercial invoice is used in international trade to finalise a completed sale. It includes tariff codes, buyer and seller responsibilities, and customs declarations. A pro forma invoice helps estimate duties before the sale but doesn't confirm the transaction.
• Quote: A quote proposes prices during negotiations. A pro forma invoice typically comes after the deal is agreed, providing the documentation buyers need for financing, customs, or procurement approval.

When to send a pro forma invoice

Send a pro forma invoice after your customer accepts a quote but before the sale is final. Most businesses only issue one when a customer specifically requests it.

Customers typically need pro forma invoices to:

• calculate import duties and customs fees
• satisfy internal procurement requirements
• secure financing or payment approval

If you're selling to importers or corporate buyers, ask whether they need a pro forma invoice before proceeding.

The sale isn't complete at this stage. Always get final confirmation from your customer before shipping products or issuing your official sales invoice.

What should a pro forma invoice look like?

A pro forma invoice looks similar to a standard invoice but must be clearly labelled "Pro Forma Invoice" at the top. This signals to the recipient that it's not a request for payment.

Every pro forma invoice should include:

• Seller details: business name, address, and contact information
• Buyer details: recipient's name, address, and contact information
• Product or service descriptions: itemised list of what's being sold
• Pricing: unit prices, quantities, and total amounts
• Terms of sale: payment terms, delivery conditions, and validity period
• Reference number: a tracking number for easy retrieval (not an official invoice number)

For international transactions, importers may also require weights, measurements, shipping costs, and specific delivery terms, often referred to as International Commercial Terms (Incoterms), which define the responsibilities of the buyer and seller.

How to create a pro forma invoice

Creating a pro forma invoice is straightforward. Follow these steps to ensure your document is accurate and doesn't affect your accounting records:

1. Start with a standard invoice template. Use your regular invoice format as a base.
2. Label it clearly as "Pro Forma Invoice." Place this prominently at the top so your customer knows it's not a payment request.
3. Complete all required fields. Include buyer and seller details, itemised products or services, pricing, and terms.
4. Add a reference number. Use a tracking number that's separate from your official invoice numbering system.
5. Keep it out of your accounts receivable. Don't record the pro forma invoice in your ledger, as the sale isn't confirmed yet.

If you're using accounting software, create documents that won't trigger income entries. Accidentally sending a sales invoice could record revenue before the transaction is complete, which may not comply with accounting standards like International Financial Reporting Standards (IFRS) 15 Revenue from Contracts with Customers.

Simplify your invoicing with Xero

Pro forma invoices help you confirm order details, support customs clearance, and meet your customers' procurement requirements, all before the sale is final.

With Xero, you can create professional invoices, track payments, and manage your cash flow in one place. Whether you're sending quotes, pro forma invoices, or final sales invoices, Xero keeps your financial records organised and accurate.

Streamline your invoicing. Get one month free and see how Xero can help your business.

FAQs on pro forma invoices

Still have questions about pro forma invoices? Here are answers to common concerns.

Is a pro forma invoice legally binding?

No, a pro forma invoice is not legally binding. It's a preliminary document created before you deliver products or services. Think of it as a good-faith estimate rather than a contractual obligation.

Should I pay a pro forma invoice?

No, don't pay a pro forma invoice. It's not a binding agreement, and the final price or terms may change. Wait until you receive an official sales invoice before making payment.

Can a pro forma invoice be canceled?

Yes, you can cancel a pro forma invoice at any time. Since it's not a legal document or official accounting record, you can simply discard it or notify your customer that it's no longer valid.

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 both documents contain similar product and pricing information, a commercial invoice requires additional details for international trade, including customs declarations, tariff codes, and specific terms governing the responsibilities of buyers, sellers, and shipping parties.

What are the advantages of pro forma invoices?

Pro forma invoices offer several benefits for your business:

• Clarity: They confirm order details so both buyer and seller agree on products, prices, and terms before the sale is final.
• Customs compliance: They provide the documentation importers need to clear goods through customs.
• Flexibility: They let you adjust products, services, or pricing without affecting your accounting records.