If you’d like to quickly and easily complete your business plan, download our Ultimate Business Plan Template and complete your plan and financial model in hours. Finally, not specifying payment terms can slow down the transaction. Customers need to know how and when payments should be made to avoid unnecessary delays or complications. Using established templates from reputable sources or creating a layout suited to your business needs and aesthetics can streamline the process.

What is Proforma Invoice? 5 Free Templates to Download

• With proforma invoicing, you can create a clear and professional document that accurately reflects the details of your business transaction.
• It should include the name of the product or service, the quantity, the unit price, and the overall cost.
• Always ensure that your proforma invoices are accurate, professional, and tailored to the specific needs of each transaction.
• You will release it in several cases to avoid surprises and disagreements.
• A pro forma statement estimates your company’s future financial performance.
• It also helps to establish the terms and conditions of the sale or service, such as payment method, delivery schedule, and other important details.

Of course, proforma invoices only mention the estimated price for the product or the service you are selling. And there is nothing wrong or unprofessional about changing the cost of it or adjusting the shipping fees. A commercial invoice’s object how to write a proforma is to let the buyer know how much they have to pay for the products and services.

The Potential for Fraud

By presenting the customer a document with the notions on how, when and how much it will be finalized for, you are staying away from any unanticipated setbacks. That means the document can be changed if the deal is not confirmed or completed. After both of the parties signed the document, the customer has to confirm that they will finalize the purchase. And only then after this agreement, you can continue with the deal. The document is not to be registered neither in the company’s accounts nor the buyer’s accounts. You can think of a proforma invoice as an in advance receipt the customer receives.

When writing a pro forma business plan, you will need to include information such as your company’s sales forecasts, expenses, capital expenditure plans, and funding requirements. You should also include a pro forma income statement, balance sheet, and cash flow statement. In general, such invoices are not legally binding documents in the same way that commercial invoices are. A commercial invoice is a formal request for payment and serves as proof of a completed sale, whereas a proforma invoice is more like a preliminary estimate of the potential sale.

‍Best Practices and Mistakes to Avoid When Writing a Proforma Invoice

Pro forma statements don’t need to meet the strictest accounting standards, but must be clearly marked as “pro forma” and can’t be used for things like filing taxes. A proforma invoice is issued before the buyer places any orders and also before the deal is finalized. These businesses range from for example, caterers for events to publishing companies.

Get started today and ensure your company’s success tomorrow. This pro forma business plan demonstrates the viability of our company and its potential for long-term success. We have a strong track record of financial success, and we are well-positioned to continue growing our business. Our pro forma statements show that we are expected to generate positive net income, and have a strong financial position and healthy cash flow. We believe that this business plan provides a clear roadmap for our company’s future growth.

Top Picks for Ecommerce Accounting Software

This simple yet professional and easy to use tool is specifically designed to those who need this the most. No matter which type of invoice you decided to go with, Someka has a Microsoft Excel template for either of them. There are also a bunch of benefits and advantages for using this document on your business.

Commercial Invoice Generator:

• Business and business transactions heavily rely on clear communication between the buyers and the sellers.
• However, the important conclusion you and the customer both come to is to agree on the price (and the additional fees).
• You don’t want to order your favorite dish and then get hit with a bill that’s way higher than you were expecting.
• However, in its pro forma statements, the company might exclude this expense, arguing it's a one-time event that doesn't reflect ongoing business performance.
• An invoice is a bill that is issued after a sale has taken place, while a proforma invoice is a preliminary document that outlines the terms of a potential sale.
• Some businesses ask for advance payments or deposits—if you do, write down the exact amount you need.

So the buyer would be required to pay what is expected until that date. Vague payment details and undecided dates will only lead to confusion. Proforma invoices are also used in consignment deals between suppliers, retailers and sellers. These deals state that the buyer does not pay for them until they sell or make a profit out of them. After the sales are done, the original seller of the products finalizes the deal and gets paid. These consignment deals mostly occur in retail stores and specific stores which specialize in selling a particular type of product.

Description of the service or goods provided, conditions, and payments. If you are dealing with goods that have variant expenses, you should pay attention to sending a pro forma invoice. This will allow the customer to be fully aware of all the expenses and fees he/she will afford. A pro forma statement estimates your company’s future financial performance.

Discrepancies between proforma and commercial invoices

Start with clear descriptions that tell customers exactly what they’re paying for. If you’re selling a “Custom Website Package,” spell out what’s included – like how many pages, revisions, and features they’ll get. Payment terms, accepted methods, and the validity period of the quote are important here. A good proforma doesn’t just lay out the subtotal, taxes, and fees; it shows the total where nobody can miss it. Begin by entering the name of the company directly below the main title.

The tax point occurs when the final sales invoice is issued after the customer agrees to the purchase. Since proforma invoices are often viewed as draft invoices, it’s useful to make them as accurate as possible to give customers a clear understanding of the expected costs. Because proforma invoices are not registered into accounts. So it does not have to interfere with financial affairs until the deal is finalized. This can help you predict your quarterly estimates without formally engaging and planning with the accounting department of your company or business.

Make sure the employees in charge of the document are in knowledge of this statement. You can use this invoice as a cost estimate for your client before all the details of the sale are drawn out and decided. Although you send a Quotation Pro forma Invoice to a potential client as a draft invoice, the proforma is a much more formal and professional way to do this. The professional uses of quotations occur during the early stages of the deal when the customers have just shown interest.

Finally, a number of proforma invoice unique, accompanied by the date of issue, ensures adequate traceability and facilitates future references. A professional proforma invoice can help companies project a professional image by communicating the sale terms clearly and concisely. Businesses can show their expertise and attention to detail by using a professional invoice template and providing all required information. This can help to develop buyer trust and credibility, as well as improve the business's reputation. Always ensure that your proforma invoices are accurate, professional, and tailored to the specific needs of each transaction. With these practices in place, you can elevate your business operations and build lasting trust with your clients.

It shows a company’s expected revenue and expenses over a period of time and can help you to identify potential problems early on. A professional proforma invoice offers businesses with an accurate revenue projection, helping them to better manage their finances. Businesses can forecast sales income and modify production and inventory levels based on the price and quantity of goods or services supplied. This ensures that firms have adequate product to fulfill demand and prevents stockouts.

A pro forma statement that is included in a business plan template should also include financial projections and break-even analysis. Business and business transactions heavily rely on clear communication between the buyers and the sellers. Rather than a simple bill to be given as a preliminary one, a proforma invoice serves more than this.

If you want to add the shipment information into the proforma document, you can choose to use the ‘detailed’ one. In terms of liabilities, exporters must be careful not to misrepresent the terms and conditions of the transaction in the proforma invoice. Any misrepresentations could lead to legal action by the buyer, including breach of contract claims, fraud claims, and other legal actions. Overall, proforma invoicing offers a range of benefits to both sellers and buyers in any business transaction, including increased clarity, transparency, and professionalism. Here are blank pro forma invoice templates that can be customized to suit your needs.