What Does a Proforma Invoice Mean? Definition, Uses, and How to Create One Online
Many businesses across the world search for “what does proforma invoice mean” when they need to send a document before requesting payment.
A proforma invoice is commonly used in:
- International trade
- Business quotations
- Export documentation
- Large or custom orders
In this guide, you’ll learn:
- What a proforma invoice means
- Why businesses use it
- How it is different from a regular invoice
- What details it should include
- How to create a proforma invoice online
Businesses today create proforma invoices using dedicated tools available in the Proforma Invoice Generator section of GoSetle®.
What Does a Proforma Invoice Mean?
A proforma invoice is a preliminary invoice sent by a seller to a buyer before goods are delivered or services are completed.
It shows:
- What will be sold
- At what price
- Under what terms
However, it does not request payment and is not recorded in accounting books.
In simple words:
A proforma invoice is a formal price confirmation, not a final bill.
Why Do Businesses Use a Proforma Invoice?
Businesses worldwide use proforma invoices for several practical reasons.
1️⃣ Price Confirmation Before Sale
Buyers often want a written confirmation of price, quantity, and terms before placing an order.
2️⃣ International & Export Transactions
Customs authorities and importers may ask for a proforma invoice before shipment.
3️⃣ Internal Approvals
Companies use proforma invoices for budgeting, approvals, and purchase authorization.
4️⃣ Letters of Credit & Banking
Banks may require a proforma invoice before issuing a letter of credit.
Because of these reasons, proforma invoices are widely used in global business.
Proforma Invoice vs Regular Invoice
This is one of the most common confusions.
| Feature | Proforma Invoice | Regular Invoice |
|---|---|---|
| Issued | Before delivery | After delivery |
| Purpose | Price estimate | Payment request |
| Accounting entry | No | Yes |
| Legal demand | Not payable | Payable |
| Used for | Quotation & approval | Billing |
If payment is due, a regular invoice should be used — not a proforma invoice.
What Should a Proforma Invoice Include?
A professional proforma invoice should include:
- Seller business name and contact details
- Buyer information
- Proforma invoice number
- Issue date and validity period
- Description of goods or services
- Quantity and unit price
- Subtotal and estimated taxes
- Shipping or delivery terms
- Payment terms (for reference only)
These details are automatically structured when using an online proforma invoice generator .
Proforma Invoice vs Commercial Invoice vs Quotation: Key Differences Explained
Proforma Invoice Example (Simple Explanation)
A typical proforma invoice may say:
“This is a proforma invoice for reference only. Payment is not yet due.”
This makes it clear that the document is not a final bill.
How to Create a Proforma Invoice Online
Creating a proforma invoice manually in Word or Excel can lead to formatting and calculation errors.
Most businesses now create them online using the Proforma Invoice Generator available on GoSetle® .
With an online generator, you can:
- Enter seller and buyer details
- Add products or services
- Set quantities and prices
- Automatically calculate totals
- Generate a clean, professional PDF
This saves time and ensures global-standard formatting.
Proforma Invoice Generator – Meaning, Format, Example & Online | GoSetle®
When Should You Not Use a Proforma Invoice?
You should not use a proforma invoice when:
- Goods or services are already delivered
- You are requesting immediate payment
- The transaction needs to be recorded in accounts
In such cases, a sales invoice or tax invoice is the correct document.
Who Commonly Uses Proforma Invoices?
Proforma invoices are widely used by:
- Exporters and importers
- Manufacturers
- Service providers
- Freelancers
- B2B companies
- International sellers
They help set clear expectations before money or goods change hands.
When Is a Proforma Invoice Required in International Trade? A Complete Guide
Conclusion
A proforma invoice is a preliminary document that helps buyers and sellers agree on pricing and terms before completing a transaction.
It is not a demand for payment but a professional way to communicate costs in advance.
To avoid errors and save time, businesses now rely on online tools like the GoSetle® Proforma Invoice Generator to create accurate, professional proforma invoices accepted globally.
Try : GoSetle® Invoice
