what is performa invoice

A pro forma invoice is a preliminary invoice that is sent to a buyer before a sale is confirmed. It is essentially 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. A pro forma invoice is not an actual request for payment, but rather a preliminary bill of sale sent to buyers when an order is placed and in advance of a shipment or delivery of goods. It is a provisional document that outlines the terms of sale, including the expected costs, fees, and date of delivery for an order. A pro forma invoice includes a description of the goods, the total payable amount, and other details about the transaction. It is used by a seller to communicate to a buyer the expected costs, fees, and date of delivery for an order, and this transparency can help the manufacturer avoid any misunderstandings when the order is delivered. 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.