The pro forma invoice is a basic financial concept. Above all, it is essential for any company that carries out international sales or simply offers a formal quote to its customers before issuing an official invoice. So, it plays a key role in the sales cycle and continues to do so even after the arrival of electronic invoicing. That is why it is important to have a thorough understanding of what a proforma invoice is and what it is used for will help you improve operational efficiency and transparency in your business management. That is precisely what we explain in this article: its nature, differences from traditional invoices, and benefits it brings to the corporate world.
What is a pro forma invoice in Spain?
A pro forma invoice is one that contains a detailed and specific offer for a product or service to be provided to a customer. The key point is that it has no tax or accounting implications. In other words, it is a preliminary commitment that allows the parties to know the details of the transaction before formalizing it.
The document resembles a conventional invoice in terms of structure and content, as it includes details of the goods or services, quantities, prices, and terms of sale. The difference is that it does not entail immediate payment obligations and is not recorded in the company's official accounting official company accounts.
But are there differences between a pro forma invoice in Spain and other countries?
In Spain, its function is the same as in other countries: to summarize in detail the cost of a sale before its official confirmation. The fact is that it is very useful for importing and exporting goods, as well as for complying with customs requirements, where an estimate of the value of the products is required before the official invoice is issued.
What is a pro forma invoice used for?
Primarily, the main purpose of a pro forma invoice is that it serves as a preliminary agreement that defines the terms of a transaction. Below, we detail its most common use cases:
- Facilitate negotiation. When you issue a pro forma invoice, you are making a specific proposal that the customer can accept, reject, or modify in a clear and transparent negotiation.
- Customs documentation. In international trade, this is usually requested so that customs authorities have an accurate reference of what is being imported or exported.
- Advance payment. It is also used as a basis for requesting advance payment for goods or services before an official invoice is issued. This allows companies to secure the resources they need in advance.
- Formal quote. Sometimes, you can use it as a formal quote, especially if you want to offer a detailed and binding proposal. In other words, they are more formal than a simple quote.
Pro forma invoice or quote: what's the difference?
At this point, you may be wondering how these two documents, which are so common in the financial world, differ from each other. Well, pro forma invoices and estimates serve similar purposes, as neither is binding and both reflect the price of a product or service prior to sale.
However, the main difference lies in the purpose and degree of formality. We show you this in this table:
| Concept | Pro forma invoice | Budget |
| Formal | Formal document, very similar to an actual invoice | Informal document |
| Detail | Specifies terms and conditions of sale | It can be more general. |
| Commitment | Serves as a preliminary commitment | It is not binding. |
As you can see, the pro forma invoice offers a higher level of commitment and detail, which is very important in large-scale negotiations or international sales.
Differences between pro forma invoices and traditional invoices
Continuing with similarities and differences with other type of invoices, although pro forma and traditional invoices are similar in structure, they have three :
- Legal validity. The pro forma invoice has no legal validity. In other words, it has no tax implications and cannot be used to justify expenses or claim taxes. You only issue it as a reference for the customer. On the other hand, a traditional invoice or any other invoice, such as a corrective invoices , are valid for tax purposes and must be recorded in the company's accounts.
- Payment obligation. A traditional invoice generates an immediate payment obligation. A pro forma invoice, on the other hand, only establishes the terms of the agreement, without this entailing a mandatory payment.
- Accounting record. Issued invoices are recorded in the company's account book. On the other hand, a pro forma invoice does not have to be recorded in the accounts, as it does not represent actual income until the final invoice is issued.
How do I create a pro forma invoice?
Beyond the technical and legal implications, below we explain how to create a pro forma invoice. It is a simple process that follows a similar pattern to that of a traditional invoice.
Therefore, the elements or data that it must contain as an invoice are:
- Header. Clearly identify that it is a pro forma invoice.
- Supplier details: company name, address, tax identification number, and contact information.
- Customer information.
- Invoice number. Although it does not have to follow the same numbering as official invoices, we recommend assigning a number to keep track of them.
- Date of issue.
- Description of products or services. Detail the goods or services with quantities, unit prices, and total prices.
- Terms and conditions of sale. Include payment terms, discounts, delivery dates, etc.
- Taxes. Even if they have no fiscal effect, it is advisable to reflect taxes so that the customer is clear about the final cost.
In addition, we insist: check that the pro forma invoice clearly states in the header that it is a preliminary document and not a final invoice. This will avoid confusion with the other party.
Pro forma invoice template
To make it clearer, here is a simplified pro forma invoice template :
| Concept | Details |
| Header | Pro forma invoice |
| Supplier | Tunegocio S.L. – Tax ID Number: 12345678A |
| Customer | Elcliente S.A. – Tax ID Number: 87654321B |
| Invoice number | PRO-0001 |
| Date of issue | 10/08/2024 |
| Description | Consulting service |
| Quantity | 10 hours |
| Unit price | 100 € |
| Total | €1,000 + VAT |
Advance payment on the pro forma invoice
On the other hand, and although we have already mentioned it, we will now discuss an aspect that is important to note, which is advance payment of pro forma invoices.
In large-scale projects or when the business relationship with a customer is new, the seller may request, along with the pro forma invoice, full payment in advance or a percentage of the total before providing the service or product. Why? Because this method has several advantages:
- The company ensures the customer's commitment its customers.
- The issuing company obtains financial resources to cover the initial costs of production or acquisition.
- For the customer, the proforma invoice is a guarantee that they will receive the products under the agreed conditions.
For all these reasons and those outlined in the article, it is a very valuable tool in commercial management. This is especially true in international trade and in sales processes with formal quotations. Although it has no fiscal validity and does not imply immediate payment obligations, its functions are very useful in the negotiation phase and, at the same time, it facilitates advance payment.
In short, understanding what a pro forma invoice is and what it is used for improves your sales processes, minimizes misunderstandings with customers, and optimizes cash flowif there is advance payment. The software from easyap software is ideal for facilitating the management of these documents, with total traceability and efficiency. It's what your company needs to face the challenges of the modern business environment. Would you like us to show you?
