Proforma Invoice

Proforma Invoice in International Trade

Meaning of Proforma Invoice, according to the Dictionary of International Trade (Global Negotiator): A sample invoice provided by an exporter prior to a sale or shipment or merchandise, informing the buyer of the price, kinds and quantities of goods to be sent, and important specifications (weight, size, and similar characteristics). The proforma invoice no only acts as a contractual offer (which may be accepted by importer's transmission of a purchase order), it is intended to be exactly replicated in the final commercial invoice, so that the buyer receives no surprises as regards, either the goods or the price. Importers may need a proforma invoice to be able to apply for an import licence or a foreign exchange permit. In the case of a letter of credit, the proforma invoice is frequently used to inform the importer of the amount for which the letter of credit has to be opened. The proforma invoice should include the following information:

A unique proforma invoice number.

The date the proforma invoice is prepared.

The identities and addresses of the seller and prospective buyer.

The proposed terms of sale (preferably Incoterms rules).

The proposed terms of payment.

A complete description of all line items including their unit costs and line-item totals.

The grand total.

Any certifications required by import authorities of the buyer's country.

The validity period of quotation.

A signature by authorized person at the seller's company, if required.

When accepted in their entirety by buyers, proforma invoice often become the “offer” and even act as a sale contract. For this reason, prospective sellers should take care to quote pricing and delivery terms information that they can live with for any order received from the prospective buyer during the validity period of quotation. See also commercial invoice. Model of International Proforma Invoice.