Proforma Invoice vs Commercial Invoice: Meaning and How to Prepare

A proforma invoice (P/I) is a preliminary quotation that an exporter sends to an importer before the deal is final. It sets out price, quantity, delivery terms and payment terms so the importer can approve the offer, apply for an import licence or prepare a letter of credit. Unlike a commercial invoice, it does not demand payment, and customs normally values goods on the commercial invoice that reflects the actual sale.

Key takeaways

• A proforma invoice is issued before the contract is confirmed, for quotation and approval, and creates no payment obligation on its own.
• A commercial invoice records the actual transaction at shipment and is used for customs, payment and accounting.
• Customs expects a commercial invoice. A proforma is accepted only in limited cases, such as samples, free goods, or when the commercial invoice is not yet available.

What is a proforma invoice?

“Pro forma” is Latin for “as a matter of form.” The exporter prepares it at the importer’s request to show the proposed price and delivery terms for goods that may be bought. Importers use it to decide whether to order, to apply for import permits, or as a reference when opening a letter of credit. Signed by both parties it can serve as evidence of a sales agreement, but in ordinary practice it stays a non-binding quotation. For how it fits with purchase orders and order confirmations, see PI, PO, OC: Trade Contract Documents Explained.

How does a proforma invoice differ from a commercial invoice?

A proforma invoice is a non-binding quotation issued before the contract and shipment. A commercial invoice is the demand for payment for the actual sale and is normally required for customs.

Item	Proforma invoice	Commercial invoice
Timing	Before contract and shipment	At or after shipment
Legal status	Quotation (non-binding)	Demand for payment for the actual sale
Purpose	Price approval, import licence, L/C opening	Customs, payment, accounting proof
Customs use	Only in limited cases	Normally required
Payment obligation	None	Yes
Amendments	Reissued freely	Limited (corrected invoice)

The fields a commercial invoice needs are covered in Commercial Invoice vs Packing List.

Which fields should a proforma invoice include?

Include the title, number and date, both parties, goods details with price and currency, the Incoterm, payment terms, validity and expected shipment date. HS codes are optional at this stage.

• A title that clearly says “Proforma Invoice”
• Invoice number and date of issue
• Names and addresses of exporter and importer
• Description, specification, quantity, unit price, total and currency
• Delivery term (Incoterms, e.g. FOB Busan)
• Payment terms
• Validity period (to protect against price changes)
• Expected shipment or delivery date

HS codes are not mandatory at the quotation stage, but many exporters add the expected code when the document will support an import licence application.

When is a proforma invoice issued, and how is it used?

Importers usually ask for a proforma during negotiations so they can confirm pricing and get internal approval. Banks often refer to it when opening a letter of credit, and some countries require it for an import permit. After shipment, a separate commercial invoice shows the actual quantities and final value. Choosing the payment method is covered in Letter of Credit vs T/T.

How is a proforma invoice calculated? An example

An importer wants to order 100 LED lamps at USD 25 each, FOB Busan.

• Quantity: 100 units
• Unit price: USD 25
• Total: USD 2,500
• Delivery term: FOB Busan
• Payment: T/T 30% in advance, 70% before shipment
• Validity: 30 days from the issue date

This figure is only an estimate. If the shipped quantity or specification changes, the commercial invoice shows the adjusted amount, and customs works from that final value.

What are the common proforma invoice mistakes?

Filing a proforma invoice as the customs invoice is a frequent error; customs wants a commercial invoice that proves the actual value and quantity. Large gaps between the proforma and the commercial invoice can cause discrepancies under a letter of credit or extra questions at customs. Leaving out a validity period exposes the exporter to raw-material price and exchange-rate risk. Quantities that do not match the packing list can delay shipment.

FAQ

Can a proforma invoice be used for customs clearance?

For ordinary paid shipments, customs expects the commercial invoice. A proforma is accepted in limited cases, such as samples, free goods, or when the commercial invoice is not yet available. US rules (19 CFR 141.83), for example, let an importer file a pro forma invoice at entry and produce the required invoice later. Check the destination country’s customs guidance for its own rules.

Can the amounts differ between the proforma and the commercial invoice?

Small differences are normal when quantity or freight changes. Large ones can cause letter-of-credit discrepancies or customs queries, so record the reason for any material change.

Does a signed proforma invoice become a sales contract?

If both parties sign and stamp it, it can serve as evidence of the agreement. Most companies still prepare a separate contract and treat the proforma as a quotation.

How long should the validity period be?

Because material prices and exchange rates move, 15 to 30 days is common. Once it expires, issue a new proforma.

Sources

• International Trade Administration, Pro Forma Invoice
• 19 CFR 141.83, Type of invoice required (LII)
• Korea Customs Service

Related reading: Commercial Invoice vs Packing List, Letter of Credit vs T/T