Momentum Bookkeeping Services

What is a Pro Forma Invoice?

Let’s look into what a pro forma invoice is and what it is used for…

Business is a numbers game and while annual reports, financial statements and cash flow reports can highlight the history of your company, invoicing and the money coming in is a lot more exciting. Invoicing helps ensure the money keeps coming in and while most of us will be familiar with what an invoice is. How many of you know what a pro forma invoice is?

Invoicing is an essential part of day to day business.  Ensuring you get paid within a set timeline while also acting as a record of your financial sales transactions – all of which can be used to prepare your bookkeeping for tax deadlines.

But what exactly is a pro forma invoice?

It is in essence a provisional bill that you can send to a customer BEFORE you deliver goods or services.

Like an invoice, it usually contains a date of issue, a description of what is being sold and of course, the total amount payable (including any taxes or additional fees). The whole point of a pro forma invoice is to ensure that you avoid any confusion with your customers over the charges that are involved in your business transactions.

Because it is sent in advance, a pro forma terms of sale can be changed.  Something that fundamentally differentiates between a pro forma invoice and a more traditional invoice that you will be associated with.

Because a pro forma invoice is sent in advance, it has no fiscal value and does not include payment terms or details – it therefore should not be included in your annual accounts.

So what is the difference between a quotation and a proforma?

A quotation goes to a potential customer who has expressed an interest in your goods and services.  It is usually sent early on when the full details of the customers enquiry are not 100% known. A pro forma on the other hand is sent when the customer and your business have agreed on the product and delivery of your services. There is more detail but still some wiggle room but you are sending it because the customer has expressed a commitment to the final purchase.

And where do invoices come into this?

An invoice is sent to the customer when the goods or services have been completed and payment is now due.  An invoice is a binding agreement.

So when exactly should I send a pro forma invoice?

Pro forma invoices are great for sending to customers when a sale hasn’t been 100% finalised but is close enough that you can send them something to mark out the expected costs.  Pro forma invoices are very common in international shipping as the value of the goods allows the items to pass through customs quicker.

What’s included in a pro forma?

Because it is not a legal document, what goes on a pro forma invoice really is up to you.  Though most of the commonly used pro forma invoices include:

  • Date of issue
  • Seller Contact Details
  • Buyer Contact Details
  • Details/Breakdown of goods or services
  • Shipping costs (if required)
  • VAT/Taxes
  • Total Amount

Find out more

For most small businesses bookkeeping is a chore, for us it is a joy. Seriously!!! We don’t like bookkeeping… We LOVE it!! And the bigger the pile of paper on your desk, the more excited we get.

We have over 17 years’ experience of working with small and medium sized businesses across every industry sector.

We have extensive experience in all major software platforms, be it XeroSageQuickbooks etc. So if there is a particular piece of software you have used previously, we can continue to use that with you.

Alternatively, many of our clients are using our own, bespoke software package which can be completely customised to your needs.

As every business is different, we will work with you to make sure that you give us this information in a way that is easiest and most convenient for you, and we will customise our reports to match your needs and to ensure they make sense to you. That way, we can maximise the value of our service to you. We work with a range of industry leading partners, whether that is Dext (previously Receipt Bank) to streamline the process of collecting your paperwork, to Telleroo if you want us to make facilitate payments to your staff of suppliers. Or, we can go old school, and just pop in to collect your paperwork at regular intervals.

We know that every business is different, which is why we will always take the time to get to know your business and to shape our service accordingly.

Initial Enquiries

While you may not love bookkeeping, we do. So whether you have a question about one of our bookkeeping services or you want to discuss a tailored service to suit what you need to get on with running your business, our door is always open.

Call or email us and lets start to build some momentum in your business.