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What is a proforma invoice and how to make it?

18 Oct 2022. 18:04
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    1. Planificación de recursos / ERP
    Scope to digitize
    1. Business processes

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In the wide world of invoicing, proforma invoices are particularly special because of their legal and commercial validity. Do you really know what they can be used for? We will tell you about it in this post! 

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Invoicing is an important topic when starting a business. There are several types of invoices such as the ordinary, simplified, corrective and electronic invoices, among which the ordinary invoice is the most common. However, you may have heard of the proforma invoice. 

This type of invoice is normally used to document commercial agreements, especially in international transactions in order to avoid any type of confusion. Its use is due to the fact that it includes all the details related to the purchase and sale of goods or services, but it has no fiscal validity. Next, we explain the reason for the existence of proforma invoices and their most common uses. 


What is a proforma invoice and what is it for?  

This type of invoice is a document of an informative nature whose data would be included in a commercial invoice. Its main purpose is to provide the buyer all the necessary information on the elements that make up the transaction. Normally, its issuance matches moments prior to the completion of a transaction, although this does not imply any obligation of payment and commitment that the transaction will be carried out. 

Unlike a commercial invoice, the proforma invoice is not valid for accounting purposes, since it is not registered and it does not form part of the company's invoicing. It is also not submitted to the Tax Agency, so it has no legal validity. However, this does not mean that it is not useful. This type of invoice can be used to demand that the conditions of the contract are respected. 

Another of the most common uses of the proforma invoice is the one related to the request of credits to justify the demand of money. It is also often used in cases related to foreign trade to justify the shipment of goods such as samples. 


Which is the difference between a proforma invoice and a quotation? 

Probably the proforma invoice reminds you of a quotation. However, although both documents are very similar, the use given to each one is different. A quotation is a preliminary informative document that is understood as an offer and its function is usually to initiate a negotiation. Therefore, it can be accepted, rejected and modified. On the other hand, the proforma invoice is usually a reflection of the final invoice that is sent once the quotation is accepted. 


When can you use a proforma invoice?  

  • In the event that an order has been placed, but the customer has not yet completed payment, nor has the goods been delivered.  

  • When you want to access some type of financing or bank loan, the proforma invoice will serve to check the loan conditions. 

  • To check the real profitability of the viability plans or as a document that accredits the expenses of a project that has not yet been started. 

  • In certain occasions to begin with some manufacturing process. 

  • To apply for subsidies in some public administrations. 


How to make a proforma invoice?  

There are certain elements that a proforma invoice must contain in order to be identified as such: 

  • You will always have to indicate the term "proforma" in a visible title at the top of the document in order to differentiate it from a traditional invoice. 

  • It must detail all those aspects that are important to complete the purchase and sale information, such as: the supplier's data, as well as the recipient's data, description of the products or services, price, quantity, among others. 

In case the transaction takes place within the European Union, the EU VAT number must be included. And if for some reason you have to issue a proforma invoice in English, it must include the same sections as in Spanish, you just have to take into account the international taxes. 

In summary, a proforma invoice can be quite useful for detailing commercial offers, especially those of an international nature. There are tools that can help you create these invoices, such as invoicing and electronic signature software. Some of the best known are holded, Acrobat Sign, Microsoft Dynamics 365 Project Operations, among others. We invite you to use the tool that best suits the needs and circumstances of your SME. 

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