What Proforma Invoice – Simple Definition
Proforma invoice is an accounting document which shows how much a certain number of goods or services will cost in advance of a shipment. What differentiates it from an estimate or price quotation is the fact that the terms of sale are subject to change. It is used by a wide variety of businesses in every industry.
Proforma invoices are used in situations when the client have not yet agreed to the prices and is send a proforma to give them an idea of how much the goods or services will actually cost. InvoiceOcean allows your clients to easily convert a proforma to an invoice by clicking the "Convert to invoice" button. It is a useful feature which saves time on otherwise having to issue a new document and enter all data from the beginning.
A properly issued proforma should contain the below information:
- The name and address of both seller and buyer, as well as their Tax Identification Number (TIN).
- Document issue date along with the date of filing or completion of delivery of goods or services.
- The word "Invoice" and document number.
- The name of product / service.
- Measurement unit and quantity of sold goods or the nature of services.
- Net price, net value, tax rate, vat and gross value.
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