Pro forma invoice

If an invoice is not issued for payment reasons, and only for customs reasons, this is known as a pro forma invoice. You will encounter documents like these in international trade relations in particular. We have summarized when pro forma invoices are used and what purpose they serve when it comes to exporting goods.

The pro forma invoice is an invoice that does not require any payment on the recipient’s part. Instead, the document is created pro forma (Latin term meaning “for the sake of form”) to comply with legal requirements – for example when exporting goods to non-EU countries (e.g. China, Japan, or Switzerland). Non-EU countries are also referred to as third countries.

The pro forma invoice is primarily used in foreign trade.

Commercial transactions with third countries are subject to mandatory declaration. If you export goods to a third country, you must declare their value to customs. And this also applies if the goods are exported free of charge for the recipient – for example in the case of sample shipments, gifts, donations, or a free replacement delivery as part of the guarantee or as a gesture of goodwill.

In such cases, a pro forma invoice is issued instead of a commercial invoice for customs purposes. This only declares the value of the exported goods and therefore has a purely informative function.

In addition, the pro forma invoice is used as an advance copy of a commercial invoice. For example, if the recipient pays in advance. In this special case, the pro forma invoice serves as a payment request.

Pro forma invoices are also used for transactions processed by letters of credit or as a prerequisite for issuing import licenses. The pro forma invoice is then similar to an offer.

In general, a pro forma invoice does not signify a booking neither at the sender’s end nor at the recipient’s end.

A pro forma invoice can also be used as a substitute document for accounting if the actual invoice has not yet been received, but you already have to make a booking. If a service has been performed and you know what it will cost, but no invoice has been received yet, you can issue a pro forma invoice for the correct amount. As soon as the proper invoice is received, it replaces the pro forma invoice. Supporting documents or internal receipts are issued, for example, for accruals and deferrals at the end of the year.

The pro forma invoice is essentially the same as the commercial invoice, but must be identified explicitly as a pro forma invoice. We recommend that you use “pro forma invoice” for the subject line.

If you issue a pro forma invoice within the scope of foreign trade, we recommend that you list all mandatory data for export invoices in order to sufficiently inform the importer and the relevant authority of the importing country about the details of the shipment.

Required details on commercial invoices usually consist of:

1. The time and place where the products/services are sold
2. The seller’s name, address, contact info, tax ID number (if applicable)
3. The buyer’s name, address, contact info, tax ID number (if applicable)
4. A detailed description of the merchandise e.g. HS Number, name of each item, grade or quality, country of origin, currency, quantity, and price per unit, etc.
5. The country of shipment
6. The appropriate trading term and location associated with the term
7. All goods and services provided by the buyer for producing the merchandise (e.g. materials and tools used)
8. A signature, signor’s title, and date of signing
9. Any additional information required e.g. import license requirements, additional certifications required by the buyer’s country, U.S. government-issued certifications, U.S. export controls, etc.

The invoice should be signed by hand and, if necessary, stamped with a company stamp.

The pro forma invoice is distinguished from the commercial invoice by its name and function. On a recipient’s pro forma invoice, you clearly state that the invoice was created for formal reasons only and therefore does not contain a payment request. Unlike in the commercial invoice, you do not specify a payment amount in the pro forma invoice.

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