what is a pro forma invoice

A pro forma invoice is a preliminary invoice that is sent to a buyer before a sale is confirmed. It is a quote in an invoice format that may be required by the buyer to apply for an import license, contract for pre-shipment inspection, open a letter of credit, or arrange for transfer of hard currency. The purpose of a pro forma invoice is to communicate to a buyer the expected costs, fees, and date of delivery for an order. It is a provisional document that outlines the terms of sale when an order is placed, and it should give the buyer as much information about the order as possible so arrangements can be made efficiently. Unlike an official invoice, a pro forma invoice is simply used to prevent misunderstandings about the specifics of a transaction, such as the amount due. Pro forma invoices basically contain much of the same information as the formal quotation, and in many cases can be used in place of one. Pro forma invoices are not always necessary but can be used as an integral part of a business.