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Your Company Name
123 Business Street
City, State 10001
Country
hello@yourcompany.com
+1 555 000 0000
PROFORMA INVOICE
INV-2025-001
Bill To
Client Name
456 Client Avenue
City, State 20002
client@example.com
Issue Date
Due Date
Description
Qty
Unit Price
Total
Subtotal$0.00
Discount$0.00
Tax (10%)$0.00
Shipping$0.00
TOTAL DUE$0.00
Payment Details:
Bank: Your Bank Name
Account: 1234567890
Payment due within 30 days. Thank you for your business!
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What Is a Proforma Invoice?
A proforma invoice is a preliminary invoice sent before goods are delivered or services are fully rendered. The word "proforma" comes from Latin, meaning "as a matter of form" - it looks like an invoice but is not yet a final, binding payment demand. It states the expected cost and terms so the buyer can review and approve before work begins or goods ship.
Proforma invoices are used in two main situations: to request a deposit or advance payment before starting work, and in international trade to allow the importer to arrange finance, apply for import licences, or clear goods through customs before the final invoice exists. A proforma is NOT a tax invoice and cannot be used for VAT reclaim purposes.
Key Features of a Proforma Invoice
Clearly labelled "PROFORMA INVOICE" - not just "Invoice"
Estimated costs - based on the agreed scope before work begins
Payment terms for the deposit - e.g. "50% deposit required to proceed"
Validity period - proforma invoices should specify how long the quoted price is valid
Shipping and delivery terms - especially important for international trade
Currency - specify clearly, especially for cross-border transactions
Frequently Asked Questions
Is a proforma invoice legally binding?
No. A proforma invoice is not a legal demand for payment - it is more like a formal price offer. The client is not legally obligated to pay based on a proforma alone. Once they pay a deposit based on it, that payment creates a binding agreement for the quoted work.
Can I use a proforma invoice for VAT purposes?
No. A proforma invoice does not count as a VAT or tax record. For VAT purposes, you must issue a full tax invoice after the goods are delivered or services are completed. Your client cannot use a proforma to reclaim input VAT.
What happens after the client pays the proforma deposit?
Issue a receipt for the deposit, then complete the work. When done, issue a final invoice for the remaining balance, deducting any deposit already received. The final invoice is the official accounting document for both parties.
When should I use a proforma instead of a standard invoice?
Use a proforma when you want to request advance payment before starting work, when the exact final cost is not yet confirmed, or when the client needs a document for import or customs purposes before goods ship.