Proforma Invoice

A proforma invoice (also written pro forma invoice) is a quotation laid out as an invoice. The seller issues it before the goods are shipped, and often before the order is final, so the buyer knows exactly what it is committing to: the goods, quantities, prices, delivery terms and payment terms. The U.S. International Trade Administration describes it as a quote in invoice format that a buyer may need to apply for an import license, contract for pre-shipment inspection, open a letter of credit or arrange a transfer of hard currency.

What a proforma invoice contains

The International Trade Administration lists the points a proforma should carry:

• Seller's and buyer's names and addresses, and the buyer's reference
• The items quoted, with prices per unit and extended totals
• Weights and dimensions of the goods
• Discounts, if any
• The terms of sale, meaning the Incoterms rule and the named delivery point
• Payment terms
• The estimated shipping date and the date the quote is valid until

Once the buyer and the import authorities have relied on it, the details should not change without the buyer's consent.

How buyers use it

• Approving the purchase: the buyer's purchasing or finance team signs off against a fixed set of terms
• Opening a letter of credit: the buyer's bank builds the letter of credit around the goods, amounts and terms on the proforma
• Import licenses and payments: in countries that license imports or control foreign-currency payments, the authorities or the bank may ask for it before the goods ship
• Freight planning: weights, dimensions and the Incoterms rule tell the forwarder what to quote and who pays which leg

Proforma vs commercial invoice

The proforma describes a sale before it happens. The commercial invoice is issued when the goods ship, records what was actually sold, and is the document customs uses to value, classify and clear the goods. Quantities and prices on the two can differ if the order changes, so never file the proforma as the shipping invoice when a final one exists.

Can a pro forma invoice clear US customs?

Only as a fallback. A US formal entry normally needs the commercial invoice (19 CFR 142.3). CBP's regulations set out a pro forma invoice format in 19 CFR 141.85: the importer's own statement of the value or price, with the parties, a full description, prices, which charges such as ocean freight are or are not included, and the country of origin. Under 19 CFR 141.91, when the required invoice is not available at entry, CBP may accept the entry if the failure is beyond the importer's control and the importer files a written declaration, any seller's invoices it has or else a pro forma invoice, and a bond for production of the required invoice in an amount equal to one and one-half times the invoice value of the goods. The invoice must then be produced within 120 days after the entry summary is filed or, if it is needed for statistical purposes, within 50 days after the entry summary is due. A licensed customs broker usually handles this for the importer.

Common mistakes

• Prices or quantities that no longer match the final order, which then conflict with the letter of credit or the commercial invoice
• No Incoterms rule or named place, which leaves freight and insurance costs open
• An expired validity date on a quote the buyer's bank is still relying on

On Airlift's lanes

On India to USA shipments, the proforma's weights, dimensions and Incoterms rule are what we need to quote the freight before the order is placed. On USA to India shipments, the Indian buyer may ask the US seller for one to arrange payment. For US entries, Airlift coordinates clearance through licensed customs brokers via its customs clearance service, and the broker will need the final commercial invoice, not the proforma.