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Definition

Pro Forma Invoice

Pro Forma Invoice is a sample invoice provided by an exporter prior to a sale or shipment of merchandise, informing the buyer of the price, description, and quantities of goods offered. This is an estimated invoice and the real one that is to be delivered upon the completion of the project would not differ from it very much.

The Latin term “Pro Forma” means “as a matter of form” which is a method that presumes the calculation of financial projects at a preliminary stage and “invoice” is the receipt of total expenses in detail provided by the service provider. 

A pro forma invoice is a seller’s estimation of the cost ahead of time so that the buyer can have an idea as to how much it may cost him/her in total. Any buyer would like to have an idea how much s/he would have to be paying. 

 

For example, if a company needs a website built and wants to know beforehand how much it may cost them. They can provide the website developer with all the things and functions they need on their website and the developer can provide them with a breakdown of the estimated cost in the form of an invoice and that is a pro forma invoice.

 

Use the Term in Sentences:

  • The pro forma invoice helps the buyer to make an informed decision before s/he decides to purchase any service.
  • The annual audit requires the pro forma invoices to be gathered and calculated.

 

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