Proforma Invoice for Export and Advance Payment: What to Include
A proforma invoice is a quote in invoice format. Buyers use it to arrange an advance, open a letter of credit, apply for an import licence or transfer currency. It should state the goods, prices, payment terms, Incoterm and named place, and a validity date. It is not a tax or commercial invoice and must be labelled "Proforma Invoice."
This guide covers why buyers ask for one, what to put on it, how to word advance-payment terms and Incoterms, and what happens after the advance is paid. For the basic difference between quotations, proforma invoices and invoices, see quotation vs proforma invoice vs invoice.
Why buyers ask for a proforma invoice
The U.S. International Trade Administration describes a pro forma invoice as "a quote in an invoice format". It says a buyer may need one to apply for an import license, contract for pre-shipment inspection, open a letter of credit or arrange a transfer of hard currency (International Trade Administration).
In practice, buyers usually ask for one in two situations:
- Advance payment. The buyer's finance team needs an invoice-style document before it will release an advance, whether the order is domestic or international.
- Export and import formalities. The buyer, their bank or their import authorities need the order details before the goods ship.
The ITA also notes that the proforma tells the buyer and the import authorities the details of the future shipment, and that changes shouldn't be made without the buyer's consent. Treat it as a document other people will rely on.
What to include on a proforma invoice for export
The ITA lists these points for a pro forma invoice:
- Seller's name and address
- Buyer's name and address
- Buyer's reference
- Items quoted
- Prices of items, per unit and extended totals
- Weights and dimensions of the quoted products
- Discounts, if applicable
- Terms of sale or Incoterm used, including the delivery point
- Terms of payment
- Estimated shipping date
- Validity date
Add these practical details too:
- A clear title: "Proforma Invoice", so nobody mistakes it for a tax or commercial invoice
- A proforma number and date, so payments and later documents can refer to it
- The currency, stated next to every total
- Your bank details, so the buyer can pay the advance without a separate email
- Product codes your buyer asks for. Some buyers or import authorities need commodity codes, such as HS codes, or other product classifications. Confirm with the buyer what their customs broker or bank needs.
How to write advance-payment terms
Vague payment terms are a common reason an advance gets delayed. State the percentage, the method and the trigger for each part of the payment. These examples are illustrative, not legal or banking advice:
- "30% advance by bank transfer on acceptance of this proforma invoice. Balance 70% against copy of shipping documents."
- "100% advance by bank transfer before dispatch."
- "50% advance by bank transfer with order. Balance 50% before dispatch."
If the buyer is paying by letter of credit, make sure the proforma's details match what the bank will check, and agree the wording with the buyer and their bank.
Say what the advance secures, such as starting production or reserving stock, and add a validity date. That way neither side is held to old prices indefinitely.
How to state Incoterms on the document
Incoterms® rules, published by the International Chamber of Commerce (ICC), set out who handles and pays for transport, insurance and risk at each stage. Incoterms® is a trademark of the ICC. On a proforma, write three things:
- The rule, such as FOB, CIF or EXW
- The named place or port, such as the port of loading for FOB
- The edition, such as Incoterms 2020
For example: "FOB Nhava Sheva, Incoterms 2020."
A rule without a named place leaves the delivery point unclear, and a rule without an edition leaves room for argument about which version applies. Agree the rule with the buyer before you issue the proforma. For what each rule covers, refer to the ICC's official publications rather than summaries.
Proforma vs commercial or tax invoice
A proforma invoice is preliminary. It isn't the commercial invoice used for customs clearance, and it isn't the tax invoice your local law requires. For example, in India a GST tax invoice is a separate document with its own requirements. Label the proforma clearly so nobody treats it as either. For a fuller comparison, see quotation vs proforma invoice vs invoice.
A fictional example
The businesses and figures are fictional, and they continue the example used across this blog.
Northfield Components, an exporter, receives a larger order from Harbor Line Fabrication, an importer in another country. Harbor Line's bank needs a proforma before it releases the advance.
Proforma Invoice PI-0058
Seller: Northfield Components · Buyer: Harbor Line Fabrication · Buyer's reference: PO-0122
Date: 11 November 2026 · Valid until: 10 December 2026 · Currency: USD
| # | Item | Qty | Unit price | Total |
|---|---|---|---|---|
| 1 | Stainless steel mounting bracket, Part No. NB-200 | 1,000 pcs | 4.50 | 4,500.00 |
| 2 | M8 hex bolt set, Part No. HB-08 | 1,000 sets | 1.20 | 1,200.00 |
| 3 | Export packing, 4 wooden crates | 1 lot | 150.00 | 150.00 |
- Total: USD 5,850.00
- Gross weight: 420 kg; dimensions: 4 crates, 80 × 60 × 50 cm each
- Terms of sale: FOB Nhava Sheva, Incoterms 2020
- Payment: 30% advance (USD 1,755.00) by bank transfer on acceptance; balance 70% (USD 4,095.00) against copy of shipping documents
- Estimated shipping date: 4 weeks from receipt of advance
- Bank details: [seller's bank account details]
- Tax isn't shown in this simplified example. Follow your local rules for export supplies.
The buyer's bank has what it needs to process the 1,755.00 advance, and the 1,755.00 + 4,095.00 split adds up to the 5,850.00 total.
After the advance
Once the advance arrives, keep the later documents consistent with the agreed proforma. The tax invoice, and the commercial invoice for customs where needed, should match the items, prices and terms the buyer accepted, unless both sides agreed a change. Show the advance received on the final invoice, so the balance due is clear.
Dispatch documents such as a packing list describe the shipment's packages and weights. They're separate documents and don't replace the commercial or tax invoice. For moving goods within India without an invoice, see delivery challan vs invoice.
For the step-by-step path from proforma to final invoice, see how to convert a quotation to an invoice.
Create a proforma invoice in eazmybiz
eazmybiz is a web app for B2B sales documents. It isn't accounting software. With the proforma invoice generator you can:
- Create a branded proforma invoice with your logo, items, payment terms and bank details
- Convert an approved quotation into a proforma invoice in one click. Write the quote first with the free quotation maker, or see how to write a quotation for a client.
- Convert the proforma invoice into a tax invoice in one click when the order is ready. Indian businesses can issue GST tax invoices with the GST invoice generator. Others use the invoice generator.
- Start from the free proforma invoice template, or follow create and issue a proforma invoice for the steps.
If your buyer is sending a purchase order with their reference, see purchase order vs invoice.
FAQs
What is a proforma invoice used for?
It gives the buyer the details of an order in invoice format before the final invoice. Buyers use it to pay an advance, open a letter of credit, apply for an import licence or arrange a currency transfer.
Is a proforma invoice the same as a tax invoice?
No. A proforma invoice is preliminary and doesn't replace the tax invoice your local law requires, or the commercial invoice used for customs. Label it "Proforma Invoice".
What should a proforma invoice for export include?
Seller and buyer details, the buyer's reference, items with unit and total prices, weights and dimensions, any discounts, the Incoterm with its named place, payment terms, estimated shipping date, validity date, currency and bank details.
Can I collect an advance against a proforma invoice?
Yes, that's one of its most common uses. State the advance percentage, payment method and what the balance is due against, and include your bank details.
How should Incoterms be written on a proforma invoice?
Write the rule, the named place or port, and the edition, for example "FOB Nhava Sheva, Incoterms 2020". Agree the rule with the buyer first.
When do I issue the final invoice after a proforma?
When the order reaches the stage at which your local rules require a tax invoice. That timing depends on the country and the transaction. Keep it consistent with the proforma, and show any advance received.
This guide is general information, not tax, legal, customs or banking advice. Check requirements with your tax authority, bank or adviser.