Proforma Invoice vs. Invoice: What's the Difference?
Edited by Harlon Moss || By Janet White || Published on November 13, 2023
Proforma Invoice is a preliminary bill of sale, while Invoice is a final bill demanding payment.
Key Differences
A Proforma Invoice is a document given by the seller to the buyer before the shipment or delivery of goods, offering a detailed preview of the items and their total cost. An Invoice, on the other hand, is a request for payment, and represents an obligation on the part of the buyer to pay the seller.
The main purpose of a Proforma Invoice is to provide the buyer with a clear idea of what they can expect in the final transaction, giving them an opportunity to review the details before committing. In contrast, an Invoice is a document sent after the delivery of goods or services, certifying that the transaction has occurred and indicating the amount due.
From a legal standpoint, a Proforma Invoice isn't considered a true invoice because it doesn't have any legal standing. The Invoice, conversely, is a legally-binding document and can be used in a court of law to demand payment or prove a transaction took place.
The Proforma Invoice can be seen as a sort of “draft” or “proposal” for a transaction, whereas the Invoice is a record of the transaction itself, detailing products, quantities, and agreed prices.
It's typical for businesses to use a Proforma Invoice as a negotiation tool, confirming the terms of a sale. On the other hand, an Invoice, being the final document, emphasizes the establishment of debt and the expectation of payment.
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Comparison Chart
Purpose
Serves as a preliminary bill or quotation.
Acts as a request for payment after a sale.
Legal Standing
Doesn't possess legal standing.
Is a legally binding document.
Time of Issuance
Issued before the delivery of goods or services.
Issued after the delivery has been made.
Nature
Considered a draft or proposal of a sale.
A record of an actual transaction.
Binding Effect
Does not establish a debt or obligation to pay.
Establishes a debt and expectation of payment.
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Proforma Invoice and Invoice Definitions
Proforma Invoice
A Proforma Invoice is a preliminary billing statement.
Before confirming the order, the supplier sent a Proforma Invoice for review.
Invoice
An Invoice is a document demanding payment for goods or services.
After the job was completed, the contractor issued an Invoice.
Proforma Invoice
It serves as a commitment to goods at certain prices and terms.
The buyer agreed upon the terms presented in the Proforma Invoice.
Invoice
It establishes the buyer's obligation to pay a certain amount.
After checking the Invoice, they realized they had 30 days to make a payment.
Proforma Invoice
A Proforma Invoice outlines goods to be delivered or services to be rendered.
The Proforma Invoice listed all the items selected for purchase.
Invoice
It acts as evidence of a transaction between a seller and buyer.
The company keeps every Invoice as proof of purchases made.
Proforma Invoice
A Proforma Invoice is not a demand for payment.
Even after receiving the Proforma Invoice, no immediate payment was required.
Invoice
An Invoice typically lists products, quantities, and agreed prices.
The Invoice detailed all the items purchased during the month.
Proforma Invoice
It's a tool for customs in international trade.
For customs clearance, they needed the Proforma Invoice provided by the exporter.
Invoice
An Invoice often includes terms of payment and payment deadlines.
According to the Invoice, a 10% late fee would be applied after 15 days.
Invoice
A detailed list of goods shipped or services rendered, with an account of all costs; an itemized bill.
Invoice
The goods or services itemized in an invoice.
Invoice
To make an invoice of (goods or services).
Invoice
To send an invoice to; bill.
Invoice
A bill; a commercial document issued by a seller to a buyer indicating the products, quantities and agreed prices for products or services that the seller has already provided the buyer with. An invoice indicates that, unless paid in advance, payment is due by the buyer to the seller, according to the agreed terms.
Invoice
The lot or set of goods as shipped or received.
The merchant receives a large invoice of goods.
Invoice
The price which a seller or dealer pays the manufacturer for goods to be sold.
Invoice
(transitive) To bill; to issue an invoice to.
I will invoice my supplier tomorrow.
Invoice
(transitive) To make an invoice for (goods or services).
Invoice
A written account of the particulars of merchandise shipped or sent to a purchaser, consignee, factor, etc., with the value or prices and charges annexed.
Invoice
The lot or set of goods as shipped or received; as, the merchant receives a large invoice of goods.
Invoice
To make a written list or account of, as goods to be sent to a consignee; to insert in a priced list; to write or enter in an invoice.
Goods, wares, and merchandise imported from Norway, and invoiced in the current dollar of Norway.
Invoice
An itemized statement of money owed for goods shipped or services rendered;
He paid his bill and left
Send me an account of what I owe
Invoice
Send an bill to;
She invoiced the company for her expenses
FAQs
Is a Proforma Invoice legally binding?
No, a Proforma Invoice doesn't have legal standing and doesn't establish an obligation to pay.
Why is a Proforma Invoice used?
It's used to give a buyer a clear idea of what to expect in the final transaction and often for customs in international trade.
What distinguishes an Invoice from a Proforma Invoice?
An Invoice is a legally binding demand for payment post-sale, while a Proforma Invoice is a preliminary document pre-sale.
When is an Invoice typically sent?
An Invoice is issued after the delivery of goods or completion of services.
Can I demand payment with a Proforma Invoice?
No, it's not a demand for payment. It's more of a draft or proposal.
What is a Proforma Invoice?
A Proforma Invoice is a preliminary billing statement sent before a sale is final.
Is an Invoice a proof of transaction?
Yes, an Invoice acts as evidence of a transaction between a buyer and seller.
Does an Invoice establish a debt?
Yes, it establishes the buyer's obligation to pay the amount listed.
Can a Proforma Invoice be used for tax purposes?
Typically, it's not used for tax purposes since it's not a final document of sale.
Are digital Invoices as valid as paper ones?
Yes, as long as they meet the required standards and criteria of the jurisdiction.
Can I negotiate terms with an Invoice?
Typically, negotiations happen before an Invoice is issued; once it's sent, terms are considered finalized.
Is there a standard format for Invoices?
While there isn't a one-size-fits-all, many jurisdictions have specific requirements for what an Invoice must contain.
What if there's an error on my Invoice?
Contact the issuer immediately to rectify the error and receive a revised Invoice.
Why might I receive a Proforma Invoice instead of an Invoice?
It might be a preliminary document to confirm details of a potential transaction.
Is every Proforma Invoice followed by an Invoice?
Not necessarily. A Proforma Invoice is a proposal, and the actual sale might not proceed.
Do all businesses use Proforma Invoices?
Not all, but many businesses, especially those in international trade, use Proforma Invoices.
Can an Invoice be canceled?
Yes, but usually it's replaced with a corrected version or a credit note.
What details are commonly found on an Invoice?
An Invoice usually lists products, quantities, agreed prices, terms of payment, and payment deadlines.
If I receive a Proforma Invoice, should I pay immediately?
No, a Proforma Invoice isn't a demand for payment. Check with the seller for specifics.
What should I do if I don't recognize an Invoice?
Reach out to the issuer for clarification and verify the transaction before making any payment.
About Author
Written by
Janet WhiteJanet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
Edited by
Harlon MossHarlon is a seasoned quality moderator and accomplished content writer for Difference Wiki. An alumnus of the prestigious University of California, he earned his degree in Computer Science. Leveraging his academic background, Harlon brings a meticulous and informed perspective to his work, ensuring content accuracy and excellence.
