A pro forma invoice looks like an invoice but isn't one - it's issued before a sale is confirmed, to show the buyer the expected costs, often to support an import, a purchase order, or a payment made in advance.
What it means
Because it doesn't represent a completed sale, a pro forma invoice doesn't raise revenue or a receivable in the seller's books, and a buyer cannot claim input VAT against it - only the tax invoice issued once the sale is finalised does that.
Where it fits in
It typically sits between the quotation and the purchase order in the trade cycle, giving the buyer a more formal cost breakdown to authorise a purchase against before the actual invoice is raised.
Key rules
- Not a demand for payment - a preliminary statement of expected costs.
- Doesn't raise revenue, a receivable, or a VAT claim.
- Commonly used to support import documentation or advance payment.
- Followed by a tax invoice once the sale is finalised.
