5 things to know about proforma invoices

A proforma invoice is a useful addition to any company’s invoicing process – unfortunately, they’re often overlooked or misunderstood, which means that many small businesses and freelancers aren’t getting the most out of their invoicing software.

To provide a bit more information about what proforma invoices are and how they can be used, here are five things you should know about proforma invoices.

1. A proforma invoice isn’t a true invoice...

There’s a couple of things required for a document to be considered a true (or legal) invoice, including the word ‘invoice’ and a unique invoice number. Without these bits of information, an invoice has no legal or financial value.

A proforma invoice shouldn’t include an invoice number, and it should clearly state ‘proforma invoice’ instead of just ‘invoice’. Because they don’t meet the requirements of a true invoice, proforma invoices don’t carry the same legal weight, which means that:

  • Customers aren’t required to pay the amount listed on a proforma invoice

  • The total amount due shouldn’t be recorded under a customer’s accounts payable or a supplier’s accounts receivable

  • You can’t use proforma invoices to reclaim VAT

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2. …but a proforma invoice does use the same invoice template

Apart from an invoice number and the words ‘proforma invoice’, a proforma invoice looks very similar to a regular invoice. They contain roughly the same information, and you can use the same invoice template for both proforma and regular invoices – including layouts, images, or logos.

Like a regular invoice, proforma invoices should include contact details, a date of issue, a description of the goods or services provided, the total amount due, and any VAT. They might also include payment terms such as which methods of payment you accept and when payment is expected.

3. A proforma invoice is different from a quote

Quotes and proforma invoices are often used at similar points in the invoicing process, and they both tell a customer how much they might expect to pay for a particular order. However, while quotes and proforma invoices can be used in similar ways, they aren’t exactly the same.

A proforma invoice is usually sent when a customer has committed to a purchase but can’t be sent an official invoice because the final details haven’t been confirmed. On the other hand, a quote is sent to a customer who has made an enquiry but wants more information before making a commitment to buy anything.

Like a quote, the price stated on a proforma invoice isn’t final, but it’s important that you provide the best estimate possible so that your customer isn’t surprised when they receive the real invoice.

4. A proforma invoice can help you get paid quicker

When you make a sale, your customer is required to pay within a specific time frame. The default due date in the UK is 30 days after a standard invoice is issued or after the customer receives their goods or services. However, you can set other terms, including asking for payment up front.

Although the invoice due date is always set by the finalised invoice, proforma invoices can speed up the payment process by letting your customer know how much they owe in advance. This gives your customer time to make any necessary arrangements, such as transferring money or getting approval from a manager or business partner.

5. It’s easy to create a proforma invoice with invoicing software

One of the quickest and simplest ways to create proforma invoices is with invoicing software like SumUp Invoices. When you use invoicing software, you can be sure that your proforma invoices are formatted and labelled correctly – all you need to do is fill in the details and click ‘save’. Once a proforma invoice has been accepted by the customer, it can be converted to a regular invoice in just a few clicks!

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