The definition
A pro forma invoice is a document issued before a sale is completed, setting out what will be supplied and what it will cost. It is used to request payment up front or to give a buyer something formal to process, but it is not a tax invoice and it does not record a sale.
When you would issue one
- A new client wants to pay before you start, and you want them to.
- The client's finance department needs a document to raise a purchase order or load a payment.
- You need a deposit to buy materials.
- Goods are being imported or cleared and a document is needed for the process.
- The final amount may still change — a pro forma is not a commitment on your books.
What it should contain
- The words 'Pro Forma Invoice', prominently, so nobody mistakes it for a tax invoice.
- Your business details and the client's details.
- A description of what will be supplied, with quantities and prices.
- The VAT that will apply, and the expected total.
- A validity period.
- Your banking details and payment terms.
Do not use your invoice numbering sequence for pro formas. Keep a separate sequence, or you will end up with gaps and duplicates in the numbering that matters.
Pro forma, quotation and tax invoice
| Document | Purpose | Goes in your books |
|---|---|---|
| Quotation | Offer to do work at a price | No |
| Pro forma invoice | Request payment before supply | No |
| Tax invoice | Record the supply and demand payment | Yes |
The sequence in practice: quote, client accepts, pro forma if they are paying up front, and then a tax invoice once the supply is made. The tax invoice is the one that counts for VAT.