Proforma Invoice vs Commercial Invoice: What's the Difference?

Generally, a proforma invoice is not a binding demand for payment on its own. It is a good-faith statement of the terms you intend to invoice. However, if the buyer accepts it in writing or pays against it, the prices and terms it shows can become part of your agreement. Treat every proforma as carefully as a contract offer, and include a validity date so old prices cannot be held against you later.

Yes. Paying against a proforma invoice is one of its main uses, especially when you require payment before you ship goods or start work. Put your bank details, the proforma number to use as a payment reference and the validity date on the document. Once payment arrives and the supply happens, issue the final commercial invoice and reference the proforma number and payment date on it.

You should show any tax the buyer will be charged, so the total they pay is accurate. Showing it does not usually create a tax liability by itself, because a proforma is not a tax invoice. However, receiving an advance payment can create a tax point in many VAT systems, including the UK's, which may mean you must issue a proper tax invoice and account for tax at that moment. Check your tax authority's rules.

Sometimes. Customs authorities in many countries accept a proforma invoice when no commercial invoice exists, for example for free samples, replacements or goods not being sold. US Customs and Border Protection, for instance, has a set format for pro forma invoices in its regulations. Rules differ by country and shipment type, so confirm with your freight forwarder or customs broker before relying on a proforma instead of a commercial invoice.

Issue a revised proforma invoice with a new reference or version number, such as PF-2026-0005-v2, and tell the buyer what changed and why. You do not need a credit note, because a proforma is not recorded as a sale. If the buyer has already paid or opened a letter of credit based on the old figures, agree the change with them in writing before you ship.

They are close but not identical. An order confirmation or sales order confirms that you have accepted the buyer's order and will supply it. A proforma invoice looks like the final invoice and is mainly used so the buyer can pay in advance, get internal approval or arrange import paperwork. Some businesses send both; others use the proforma as the confirmation. Label each document clearly to avoid confusion.

Most commercial dealings do not require one. However, banks processing letters of credit, import licensing offices and some customs authorities may ask for a signed or stamped proforma, so check what the buyer's bank or importing country expects. Adding an authorized signature costs little and can prevent a rejected application. Make sure the details match the final commercial invoice exactly.

A proforma invoice previews the final bill and is not recorded as a sale. A deposit or advance invoice is a real invoice from your main sequence that asks for part of the price up front and is recorded in your books. Where an advance payment triggers a tax obligation, some businesses issue a deposit invoice instead of a proforma so the tax paperwork is in place from the start.

You normally refund the prepayment, minus any cancellation charges your terms allow. Because no sale was recorded, there is usually no invoice to correct. If you issued a tax invoice when the advance payment arrived, you will also need a credit note to reverse it and adjust your tax records. Put your cancellation and refund policy on the proforma so both sides know the rules beforehand.

All three spellings are widely used and mean the same thing. The term comes from the Latin pro forma, meaning "as a matter of form". Pro forma (two words) is common in dictionaries, while proforma (one word) is popular in international trade documents. Whichever you choose, use it consistently in the document title, your numbering prefix and your emails so the buyer knows it is not a final invoice.