When running a business, you’ll encounter various documents that look similar but serve different purposes — including Proforma Invoices, Invoices, and Purchase Orders (POs). Understanding the distinctions and how these documents tie together is essential for smooth financial and operational workflows.
What Is a Proforma Invoice?
A Proforma Invoice is a preliminary bill of sale sent by a seller to a buyer before goods or services are delivered. It outlines the estimated costs, quantities, and terms but is not a demand for payment. Instead, it functions as a quote or formal offer, helping buyers:
Understand pricing and terms ahead of time
Secure approvals or financing
Plan budgets before committing to purchase
Proforma invoices are commonly used in international trade or customized orders where exact costs may vary.
What Is an Invoice?
An Invoice is a formal request for payment issued after goods or services have been delivered or rendered. It legally demands payment from the buyer according to agreed terms, including:
Final prices
Payment due dates
Banking details
Tax information
The invoice is a critical document for accounting, bookkeeping, and cash flow management.
What Is a Purchase Order (PO)?
A Purchase Order is a document issued by the buyer to the seller to formally request goods or services. It includes:
Types and quantities of products/services required
Agreed prices
Delivery dates
Payment terms
A PO authorizes the supplier to fulfill the order. It serves as a contract ensuring both parties agree on the transaction details.
How Do These Documents Tie Together?
Purchase Order (PO) — Buyer initiates by sending a PO to the seller to confirm the order.
Proforma Invoice — Seller responds with a proforma invoice to confirm pricing, terms, and delivery estimates before shipment or service.
Invoice — After delivery, the seller sends an official invoice requesting payment per the agreed terms.
This workflow protects both parties, streamlines communication, and facilitates clear accounting and compliance.
Document Bundles: Simplifying Your Business Transactions
To keep your sales process efficient and organized, it’s useful to bundle these documents together digitally or physically for each transaction:
Bundle Example: Purchase Order + Proforma Invoice + Final Invoice + Delivery Note + Payment Receipt
Benefits include:
Clear audit trail
Easier dispute resolution
Faster payment processing
Copy & Paste Proforma Invoice Template (Improved)
You can easily customize and reuse this template by filling in the placeholders.
yamlCopyEditPROFORMA INVOICE # [Invoice Number] (Revised [Revision Number])
Date: [Date]
SELLER DETAILS:
Company Name: [Seller Company Name]
Registration Number: [Registration Number]
Contact Person: [Contact Person Name]
Tel: [Phone Number]
Email: [Email Address]
Website: [Website URL]
Physical Address: [Physical Address]
Delivery Address: [Delivery Address]
CLIENT DETAILS:
Company Name: [Client Company Name]
Contact Person: [Client Contact Name]
Tel: [Client Phone Number]
Email: [Client Email Address]
Delivery Address: [Client Delivery Address]
ORDER DETAILS:
Description: [Description of goods/services]
Quantity: [Quantity]
Unit Price: [Unit Price]
Nett Price: [Nett Price]
Subtotal: [Subtotal]
Additional Items:
[Add rows for other items]
LABOUR:
Hours: [Labour Hours]
Rate per Hour: [Rate per Hour]
Subtotal Labour: [Labour Subtotal]
GRAND TOTAL: [Total Amount]
BANKING DETAILS:
Bank Name: [Bank Name]
Account Type: [Account Type]
Account Number: [Account Number]
Branch Code: [Branch Code]
TERMS AND CONDITIONS:
1. This proforma invoice is valid for [Validity Period] days from the date above.
2. Payment terms: [Payment Terms]
3. Delivery date estimate: [Delivery Date]
4. Goods remain property of seller until fully paid.
5. Additional terms: [Other Terms]
PLEASE SEND PROOF OF PAYMENT TO: [Payment Confirmation Email]
USE PROFORMA INVOICE NUMBER AS PAYMENT REFERENCE.
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Thank you for your business!
[Seller Company Name] Team
