Pro Forma Invoice
A preliminary invoice sent before delivery.
A pro forma invoice is an estimated or preliminary bill sent before goods are delivered or services are completed. It serves as a good-faith estimate, a request for payment in advance, or documentation for customs in international trade. Unlike a standard invoice, it does not represent a binding obligation to pay but outlines what the final invoice will look like.
Example
An exporter sends a pro forma invoice to an overseas buyer showing $25,000 for 500 units, which the buyer uses to arrange payment through a letter of credit before shipment.
Why It Matters for Your Business
Pro forma invoices set expectations with clients about costs before work begins and are required documentation for many international trade transactions.
Related Terms
More Invoicing Terms
AR Aging
A report categorizing outstanding invoices by age.
Billing Cycle
The recurring period between billing statements.
Credit Memo
A document reducing the amount owed by a customer.
Days Sales Outstanding
Average days to collect payment after a sale.
Invoice
A document requesting payment for goods or services.
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