Pro forma invoices help companies allocate budgets and funds for the products and services they intend to purchase. Commercial invoices for importing and exporting goods may also include the exact shipping information, alongside information like the port of loading and discharge. Conversely, commercial invoices contain the exact quantities and product descriptions. They may also include only tentative information about shipping and delivery. Pro forma invoices can contain information about projected quantities. Name, date and signature of an authorised representative Details includedīoth types of invoices include the following details: Any specific product information, such as a delivery timeline or terms of payment, can also vary across both types of invoices. Commercial invoices don't necessarily have to mention the term commercial and can skip mentioning the type. Pro forma invoices have the words pro forma written clearly on them to ensure that the buyer knows this. While there aren't many differences between both types of invoice formats, the minor changes that exist are important. Related: What Is Turnover in Accounting? (Plus Formulas and Examples) Format In this case, businesses can use a pro forma invoice to expedite the shipping if it's taking time to prepare the commercial invoice with accurate details. Since they get issued along with or after the delivery, commercial invoices can take considerable time to prepare. Typical items that use pro forma invoices may include product samples, personal objects, marketing assets and other items marked for return.Ĭommercial invoices provide the exact cost and details of products to the buyer. Sellers usually create pro forma invoices to inform buyers about the anticipated costs and prevent any delay during transfers through customs. Here are some prominent differences between the two types of invoices: Purpose While both the pro forma and commercial invoices contain similar information, they're significantly different. Related: Explanation, Benefits and Example of Variable Cost Differences between a pro forma invoice and a commercial invoice Once a commercial invoice gets issued, both entities can book the entry in their accounts. It also includes the details of the goods or services, their individual and cumulative price, the terms of payment and shipping details, if any. Commercial invoices usually serve as legal records of the transactions that take place between two entities as it gets issued after the delivery of goods or services.Ī commercial invoice typically includes the name, address, contact details and tax information of the buyer and seller. These invoices get issued after the seller provides the goods or services and includes the exact details of the items or services rendered, as opposed to estimates in a pro forma invoice. What is a commercial invoice?Ī commercial invoice is a final sales invoice containing all the details of the actual production and delivery expenses. Businesses that import and export goods or services use pro forma invoices extensively. The final invoice gets issued after the delivery of the goods or services and may or may not match the pro forma invoice. Almost all industries use the pro forma invoice to get approvals as a part of their internal purchase processes. Other than the cost of production or services, a pro forma invoice also generally includes information like commission rates, fees, taxes, delivery terms, custom clearance fees and additional charges.īuyers use the pro forma invoice to estimate the total expenses they might incur and can decide whether to place the order. Pro forma literally means as a matter of form and businesses, sellers and freelancers may use it when it's challenging to provide exact charges in exchange for a particular product or service. commercial invoice can help you determine their differences effectively: What is a pro forma invoice?Ī pro forma invoice is a document that gives the buyer an estimate of the price of goods or services before their delivery. Understanding the definition of pro forma invoice vs. commercial invoice, explain their differences and answer some frequently asked questions about them. In this article, we define pro forma invoice vs. Learning about the differences between these invoices can help you use them effectively. Most companies and individuals use two types of invoices to expedite the sales process and streamline the payment and delivery of products, namely the pro forma invoice and commercial invoice. Invoices are vital financial documents that help businesses entities, sellers, services providers and freelancers manage payments and budgets.
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