A proforma invoice, which is highly important for all companies operating in the commercial field, is a type of invoice that needs to be issued for the future. You can find the answers to many questions, such as what type of invoice I should issue, what a proforma invoice is, and how it is prepared—which especially create big question marks in the minds of newly started entrepreneurs and business operators—by reading the rest of the article.
What is a Proforma Invoice?
It can be said that a proforma invoice, which does not carry any obligations, is a proposal invoice. This document, which specifies the services offered or goods sold by one party to another, can also be called a preliminary invoice.
This type of document, frequently used in foreign trade, does not have any regulation in Commercial and Tax Law. For this reason, each company can prepare a proforma invoice suitable for its own needs. However, it is worth noting; this type of document also carries the character of an international sales contract.
What Information Should a Proforma Invoice Contain?
During the proforma invoice preparation process, specific information must be recorded on the document. However, prior to this information, you need to add the phrase "Proforma Invoice" on the invoice. After adding the proforma invoice phrase, you can create your invoice by including the following information:
• Type of goods and services
• Invoice date
• Personal information of the buyer and seller: name, surname/title, addresses
• Origin of the goods
• Size, weight, and quantity of the goods
• Unit price, quantity, and amount of the goods or services
• Type of delivery
• Type of shipment
• Detailed explanation about the goods or service (packaging features, number, etc.)
• Freight and insurance premium amount
• Signature of the person issuing the document
What are the Points to Consider When Preparing a Proforma Invoice?
In document preparation and arrangement processes, indicating the type of document you have prepared is definitely an important point you need to pay attention to. It should also be noted that the proforma invoice, which has simpler features compared to regular invoices, should be prepared in letterhead form. The important rules you need to pay attention to while preparing a proforma invoice can be listed as follows:
• The invoice number and date, which should be on almost every invoice, must be located in the upper right corner of the document.
• In the upper left corner, seller information such as name, surname, title, and address should be written, and immediately below it, the buyer information should be written in the same way.
• The service, product, and all details regarding these services or products must be specified in the middle section of the invoice. These details should also include the description/duration of the services or products, unit prices, and VAT rates.
How to Prepare a Proforma Invoice?
As with every invoice, specific data is required for a proforma invoice. The data to be recorded on a proforma invoice, which has a very simple form compared to other invoices, is also at an introductory level. You can choose different programs when creating the page where the data will be recorded. However, the most frequently used programs for this process are Excel and Word. Excel's tabulation feature provides great convenience for proforma invoice preparation processes.
During the preparation process of the document, the following details of the product or service intended to be sold must be specified:
• Price
• List of requested needs
• Dimensions
• Currency in which the sale will be realized
• Insurance expenses
• Terms of payment
• Type of shipment
• Validity period of the offer.
Why is a Proforma Invoice Used and Who Can Use It?
The proforma invoice, which is used in import and export transactions in foreign trade, is issued before the delivery of a service or good. In this issued document, the buyer can review all details regarding the service or good. The fields of most frequent use and reasons for using a proforma invoice, which can be prepared and issued by all businesses operating in the commercial field, can be listed as follows:
• The proforma invoice, which significantly accelerates commercial processes in the foreign trade sector, allows clarifying sales details and managing the sales process effectively.
• In the e-commerce sector, the proforma invoice, where buyer and seller information is documented and payment and delivery details are included, can also be issued to inform consumers.
• The production and logistics sector is an area with complex processes and a very high rate of making mistakes. The proforma invoice also has the character of a document that prevents various complications and minimizes the rate of making mistakes.
Proforma Invoice Examples: In Which Situations is It Used?
A proforma invoice template, which serves as a preliminary invoice or an offer invoice, is a document that is frequently needed. This document, which is prepared to present offers or manage the purchasing process in situations where purchases are planned in trade, can also be requested to receive an advance payment.
In addition, we have prepared a detailed proforma invoice sample for you as a Google doc. You can access it online from this link.
Proforma Invoice and Export Operations: How to Use a Proforma Invoice When Exporting?
A proforma invoice is an important document used in export transactions. It contains the details of the commercial agreement made between the exporter and the buyer, and is required for the buyer to make the payment. The use of a proforma invoice regulates the export process and meets the expectations of both parties. The process steps regarding the use of a proforma invoice when exporting are as follows:
Determining Product and Agreement Details
The exporter and buyer must determine the details and terms of the commercial agreement. Agreement details should include info such as description, quantity, price of the products, payment terms, delivery method, packaging, and insurance information.
Preparing the Proforma Invoice
The exporter prepares the proforma invoice containing all agreement details and sends it to the buyer. To remind you of the information that should be on a proforma invoice again, it can be listed as follows:
• Exporter and buyer information (name, address, phone, etc.)
• Invoice date and number
• Description, quantity, and price of products
• Delivery terms (indicated with Incoterms)
• Terms of payment
• Packaging and insurance information
• Total invoice amount
Buyer's Approval
The buyer must review the proforma invoice and approve it if they accept the terms of the agreement. This approval can be done in writing or electronically, or by making a prepayment.
Prepayment and/or Opening of a Letter of Credit
After the proforma invoice is approved, the buyer can make a prepayment according to the payment terms or have a letter of credit opened. The exporter continues the process by checking this payment or letter of credit information.
Initiation of Export Operations
The exporter starts the export operations after receiving the buyer's payment or confirming that the letter of credit has been opened. This process covers the production, packaging, shipment, and customs clearance of the products.
Issuing Commercial Invoice and Other Export Documents
When the export operations are completed, the exporter issues the commercial invoice and other export documents. These documents must comply with the agreement terms specified in the proforma invoice.
Navlungo is Always by Your Side in Your Export Process
Navlungo is a digital logistics platform that simplifies and accelerates your export process. Navlungo allows you to get quotes from logistics companies, evaluate the most suitable price and service options, carry out shipment tracking, and manage complex processes such as customs operations.
Navlungo is also on your side as a reliable solution partner in your export transactions by offering transparent pricing and comprehensive customer support. You can contact Navlungo immediately to carry out your export transactions in a more efficient and hassle-free manner.
