For the full comparison, see our guide to proforma vs commercial invoices — when to send each, why a proforma carries no tax, and how customs treat them.
Proforma Invoice A preliminary invoice sent before work is complete or goods are delivered
Definition
A proforma invoice is a preliminary billing document sent to a buyer before goods are shipped or services are completed. It outlines the expected costs so the buyer can arrange payment, approval, or customs clearance — but it creates no legal obligation to pay. Only a final tax invoice is a formal demand for payment.
When to Use a Proforma Invoice
- Before international shipments for customs valuation and clearance
- When a client needs pre-approval or budget sign-off before work starts
- For project estimates before work begins
- For subscriptions or recurring services before the first invoice is issued
What to Include
- Clearly labelled "PROFORMA INVOICE" or "PRO FORMA"
- Your business name and address
- Client name and address
- Itemised list of goods or services with estimated prices
- Currency, validity period, and expected payment terms
Proforma vs Tax Invoice
| Feature | Proforma Invoice | Tax Invoice |
|---|---|---|
| Purpose | Estimate / pre-approval | Formal demand for payment |
| Payment obligation | None — it's an estimate | Legally due by the due date |
| Tax treatment | No VAT/GST charged | Tax applied where applicable |
| Used for | Customs, budgets, quotes | Accounting, tax records |
Frequently Asked Questions
Is a proforma invoice legally binding?
No. A proforma is an estimate — it creates no legal obligation to pay. Only a final tax invoice is a demand for payment. Clients can review and decline a proforma without consequence.
Do I charge VAT/GST on a proforma invoice?
No VAT or GST should appear on a proforma invoice. Tax only applies to the final invoice once the supply is confirmed. Adding tax to a proforma can cause confusion and accounting errors.
What happens after a proforma is accepted?
Once the client approves the proforma, deliver the goods or services, then issue a final tax invoice with the same details and a unique invoice number. The tax invoice replaces the proforma as the official payment request.
Can I convert a proforma to a real invoice?
Yes. In Zap Bill you can duplicate any invoice and mark it as final. Update the title, add a proper invoice number, and include applicable taxes before sending the final version to your client.
How long is a proforma invoice valid?
Typically 30–90 days. Always state a validity date on the proforma so clients can't hold you to old prices if costs change. After the validity period, issue a fresh proforma with updated pricing.
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