Proforma Invoice and Its Effect Toward Your Business

Daniel Nugraha

July 29, 2019

Most of us may recognize invoice but, not proforma invoice. Generally, we may only know invoice since it’s often used in any business transaction. But, how about proforma invoice? Proforma invoice is as important as invoice. Whether you receive the invoice or create it for the customers. It’s an integral part of business that help your business run smoothly.

So, what is it? What’s the difference between proforma invoice and general invoice that we often use? Of course, there’s difference between them especially in the process. We may know the meaning but not the term. Thus, we need to know when we should give it and any rules in giving it.

Through this article, we would like to give you some information about proforma invoice and its effect toward your business. Besides, you can know when to create it when you have finished read.

What is proforma invoice?

First, we need to know what proforma invoice is. It’s a bill of sale which is sent to buyers in advance of goods delivery shipment. Proforma comes from Latin, as a matter of form. Usually, it’s used in international transaction.

The customer will get information about purchased items and important info such as, transport charge and shipping weight. Proforma will be given at the early process. Afterwards, the customer can see about the price and other information.

When someone is interested in shipping your product, you will send proforma to his or her. However, it’s not an official demand for payment. There are various styles of proforma. It’s made based on the firm’s needs.

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Proforma invoice vs invoice

There are two kinds of term, proforma invoice and actual invoice. Does it same or not? Of course, both are different. Proforma is only a temporary invoice that gives you about several information such as, the goods price, shipping information and other information. While invoice is an official letter that contains the price, request that should be paid.

If you get proforma then you don’t need to pay since, it’s still unofficial or, it’s not the actual price that you must pay. Besides, proforma can’t be used to reclaim VAT. Thus, it’s something that you need to know for the transaction.

However, proforma and actual invoice use same template. Both contain usual information needed by the customer. You can use invoice template to make invoice and vice versa.

Why is it important?

Okay, we already know about the definition of proforma invoice and its difference with invoice. Why is it important? There are several reasons about why you should make it and include it into the transaction.

First, proforma can help you to get paid quicker. When the customer agrees to buy your product, he or she need specific time to pay it. Each country has different payment time. In this case, proforma can help you to get paid quicker by providing information for the buyer.

It will give him or her enough information about how much is the sale. Besides, they can make necessary arrangement for approval or money transfer from the manager or their client.

Second, the customer will get enough information about the product’s benefit. Sometimes, the customer needs to find product’s information. By seeing proforma, they know about the product and increase the purchase percentage.

Making Proforma Invoice with Accounting Software

The improvement of technology has brought huge impact on many aspects like, finance. There are many accounting software appear to help many people. You don’t need to make proforma invoice manually since, there are many software that provide it already like, Paper.id!

Paper.id is an invoice and accounting software with various financial features such as, stock opname, receipt, and other features. Besides, IT’S FREE AND EASY TO USE, especially for those who don’t understand accounting.

By using Paper.id, you are able to send invoice easily through email or Whatsapp. It’s easy and you can get payment faster. Use it now by clicking the link below to get it for FREE!