What is a proforma invoice?

Definition of proforma invoice

A proforma invoice, which may also be written "pro forma invoice", is a document that you might issue to a customer before you know all the facts about the sale.

When you're in the process of negotiating a sale, you might not know exactly how much you're going to charge your customer or exactly what they're going to buy from you. You might draw up a proforma invoice as a temporary document so that your customer has some idea of how much they can expect to pay.

A proforma invoice is a management document only, so it wouldn't be added to your accounts and the invoice amount won't appear as part of your sales or your debtors. Your customer can't use a proforma invoice to reclaim any VAT.

It's important to remember that a proforma invoice (just like an estimate) is not binding on your business. In other words, you don't have to supply the goods or services at that price whereas with a quote or quotation, you do.

Creating an estimate workflow

FreeAgent's estimates functionality enables you to customise estimates from a choice of templates, send them to clients by email, and track whether they are approved or rejected. At the end of the job you can also quickly convert the estimate into an invoice.