What is a pro forma invoice?

Published Wednesday 23 September 2026

Table of contents

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

Key takeaways

• Use a pro forma invoice when customers need preliminary cost information for financing, customs clearance, or internal procurement, but wait for their request before you create one.
• Label the document clearly as "pro forma invoice" and include standard invoice details apart from an official invoice number and due date, since it creates no payment obligation or accounting entry.
• Keep pro forma invoices out of your accounts receivable because they represent pending sales, and issue the final sales invoice only after the customer confirms.
• When you quote an overseas buyer in a foreign currency, the pro forma rate is a commercial estimate, while the final tax invoice must use an IRAS-approved rate at the time of supply.

What is a pro forma invoice?

A pro forma invoice is a preliminary document you send a buyer before a sale is final. The U.S. International Trade Administration describes it as a quote in an invoice format that a buyer may need to apply for an import licence, open a letter of credit, or arrange financing. It sets out the products, services, and prices in a transaction, but it isn't a request for payment.

Unlike a standard invoice, a pro forma invoice:

• has no invoice number
• has no due date
• isn't recorded in your accounts receivable

Think of it as a detailed preview of the final invoice, ready for the moment the sale is confirmed.

Three common reasons for issuing a pro forma invoice

Businesses usually issue pro forma invoices in three situations:

• Arranging buyer financing: buyers use pro forma invoices to confirm order costs and secure financing before they commit to a purchase.
• Clearing customs for imports: customs authorities often need detailed cost data to clear goods; U.S. Customs rules require a pro forma invoice filed with each entry for instalment shipments.
• Meeting procurement requirements: some buyers request pro forma invoices as part of their internal purchasing process because they're firmer than a quote.

What should a pro forma invoice look like?

A pro forma invoice looks much like a regular invoice, but it must be clearly labelled "pro forma invoice" at the top. The International Trade Administration suggests including details such as the terms of sale or Incoterm, payment terms, and a validity date, alongside the following:

• Buyer and seller details: names, addresses, and contact information for both parties
• Product or service descriptions: an itemised list of what's being sold
• Prices and quantities: unit costs and totals for each line item
• Terms of sale: payment terms, delivery conditions, and any warranties that apply
• Reference number: a tracking number for easy retrieval, which isn't an official invoice number
• Weights, measures, and shipping costs: needed for international shipments and customs clearance

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

Pro forma invoices are often mixed up with other business documents. Here's how they differ.

• Sales invoice: a formal request for payment sent after a transaction, with a due date and an accounts receivable entry. A pro forma invoice goes out before the sale is final and doesn't ask for payment.
• Commercial invoice: used in international trade to declare the value of goods for customs, with tariff codes and confirmation that the sale is complete. A pro forma invoice helps estimate duties before shipment but doesn't finalise the deal.
• Quote: a price estimate used during negotiations, before any agreement. A pro forma invoice usually comes after the deal is agreed and supports steps like financing or procurement.
• Tax invoice: a legal document for GST-registered businesses that shows the tax on a sale. Because a pro forma invoice comes before the sale, no tax is due, though you can show the expected GST.

When to send a pro forma invoice

Send a pro forma invoice when a customer specifically asks for one. This usually happens after a quote is accepted and both parties are committed to the deal.

Customers ask for pro forma invoices to:

• calculate import duties and customs fees
• satisfy internal procurement requirements
• arrange financing for the purchase

If your customer imports goods internationally, check whether they need a pro forma invoice before you finalise the sale.

The sale is still pending at this point, so get confirmation before you process the order, ship products, or issue the final sales invoice.

How to create a pro forma invoice

Creating a pro forma invoice takes only a few steps. Follow this process to produce a professional document that stays separate from your accounting records.

1. Start with a standard invoice template from your accounting software, or a blank document.
2. Label the document "pro forma invoice" clearly at the top so your customer knows it's preliminary.
3. Add your business details, including name, address, and contact information.
4. Include your customer's details, including name, company, and address.
5. List the products or services with descriptions, quantities, and prices.
6. Add a reference number for tracking, which isn't an official invoice number.
7. Include payment terms, delivery conditions, and any applicable GST.
8. For international shipments, add weights, dimensions, and estimated shipping costs.

Keep the pro forma invoice out of your accounts receivable ledger. The sale is still pending, so payment obligations begin only after you issue the final invoice. Recording a pro forma as a sales invoice overstates income if your business uses accrual accounting.

Quoting in a foreign currency

A pro forma invoice is often how a Singapore exporter quotes an overseas buyer in the buyer's own currency, well before the commercial or tax invoice is issued. The currency you pick, and the rate you attach to it, shapes how much you'll actually collect.

Which rate to quote at

There's no IRAS-prescribed exchange rate for a pro forma invoice, because a pre-sale quote is a commercial decision rather than a compliance one. Choose a rate that matches how much currency movement you're willing to absorb before payment.

Exporters commonly quote in one of these ways:

• the prevailing spot or market rate on the day you quote
• the market rate plus a small buffer to absorb movement before payment
• a rate fixed in the contract or stated on the pro forma
• a rate locked with a forward contract for settlement between 3 days and 1 year out

Forward contracts are a general trade-finance tool: the U.S. International Trade Administration explains how exporters can manage foreign exchange risk by setting a rate now for settlement later. This is general trade guidance, not Singapore law.

What changes on the final tax invoice

The rate on your pro forma is only an estimate. Once the sale is complete, the final tax invoice has to use an IRAS-approved exchange rate at the time of supply, which can differ from the rate you quoted.

Under IRAS rules for invoicing customers, a standard-rated sale billed in a foreign currency must show three amounts in Singapore dollars on the tax invoice: the total excluding GST, the total GST, and the total including GST. You convert them using an IRAS-approved rate.

Those approved rates come from IRAS guidance on foreign currency transactions: rates published by local banks or locally circulated newspapers, updated at least once every 3 months and applied consistently.

Exports of goods can be zero-rated at 0% GST, but only if you're sure the goods will be exported and you hold the required export documents within 60 days of the time of supply. Otherwise, the sale is standard-rated at 9%.

GST isn't due at the pro forma stage anyway. IRAS treats a pro forma invoice as not an invoice for GST purposes, so it doesn't affect when you report the supply in your GST return.

Who carries the currency movement

Whoever holds the currency risk depends on which currency the invoice is in. This is a general principle in international trade, not a Singapore tax rule.

Invoice in the buyer's currency and you, the Singapore exporter, carry the risk that it weakens before payment. Invoice in Singapore dollars and the buyer carries that risk instead.

A forward contract or a fixed-rate clause in the contract can shift or remove that exposure, so agree the currency and the rate mechanism before you send the pro forma.

Handle your invoices and quotes with Xero

Once the sale is confirmed, you'll want to turn that pro forma into a proper invoice without the double handling. Xero lets you create quotes, convert them into invoices, and bill in multiple currencies from one place, so your records stay accurate as rates move. Sign up for a plan and get one month free to see how it fits your business.

FAQs on pro forma invoices

Here are answers to common questions about pro forma invoices.

Is a pro forma invoice legally binding?

A pro forma invoice isn't legally binding. It's a good-faith estimate you create before you deliver products or services.

Can a pro forma invoice be cancelled?

Yes, you can cancel or discard a pro forma invoice at any time. Because it sits outside your accounts, there's nothing to reverse if the sale falls through.

Can you turn pro forma invoices into commercial invoices?

A pro forma and a commercial invoice are separate documents that you create individually. They share similar information, but a commercial invoice adds the legal and regulatory details international trade needs, such as tariff classifications and terms agreed between buyer, seller, and customs authorities.

Is it OK to pay a pro forma invoice?

Wait for an official sales invoice before you pay. Prices and terms can still change before the sale is finalised.

What are the advantages of pro forma invoices?

Pro forma invoices bring several benefits:

• Clarity for both parties: confirms products, prices, and terms before the sale is final, which reduces misunderstandings
• Customs documentation: gives customs authorities the detailed information they need to clear imported goods
• Flexibility to make changes: lets you adjust products, services, or costs while your accounting records stay intact
• Access to more customers: opens doors to buyers, especially importers, who require pro forma invoices in their purchasing process