Role of Proforma Invoice in Export Business

By | June 13, 2020



In export business, providing proforma invoice to your prospective buyer can make a positive as well as lasting impression.

Proforma invoice helps to make a pleasant first experience for the buyer. This kind of document is the first export document that would be created in export. It can be considered as a contract of compact form of international sales. When some buyer expresses interest in the goods, he would send an inquiry mail or letter along with asking for formal or informal quote.

It means that he wants a proforma invoice for the product. This document looks like that of an commercial invoice but it acts like a quote.

If proforma invoice is been done correctly then commercial invoice would be a replica of it. It is been used to manage Letter of credit. This invoice serves as a negotiating tool and can work as a blueprint for the contract that would be done between the two parties.

 Features as well as Benefits of Proforma Invoice –

  1. You and your customer can use it as a negotiating tool –

Negotiation is a crucial part of trade and proforma invoice can help in it.

  1. It is considered as a voluntary document –

Although voluntary, document but universally accepted and adopted form of invoice for exports.

  1. Considered as a blue- print for export process –

If correctly made, it is been used as a final commercial invoice and this invoice can be used in further exports as well.

  1. Invoice is valid for certain specified time only –

There is a possibility that transportation charges can rise as well as there can be fluctuation in currency as well and at this time, Proforma invoice helps.

Things included in Proforma Invoice –

  1. Product price
  2. Detailed description of the product including HS code
  3. Terms of payment
    1. Expiration dateqaz
  4. Delivery terms
  5. Time, place and date of delivery

An international proforma invoice should include the following items without fail –

  1. Name and address of the buyer and seller
  2. Reference number and inquiry date of the Buyer
  3. List of inquired products and small description
  4. Price of the product
  5. Delivery details
  6. Sales terms
  7. Payment terms
  8. Shipping cost and Insurance cost
  9. Sales currency agreed by both
  10. Quotation validity period
  11. Estimated shipping period

Components to be considered while completing the invoice –

  1. Price
  2. Sales terms
  3. Details of goods
  4. Terms of payments
  5. Export control
  6. Details of delivery

How does a Proforma Invoice work?

Before the production starts, Exporter should issue Proforma invoice. Importer after checking all the details of the invoice would sign it. Exporter sends the signed terms and conditions related to sales to that of the importer and agree to them. The importer and exporter confirms the order by signing the Proforma invoice. It is the most influential part of a deal and so due care should be taken in preparing the said invoice.