An Indian exporter is discussing a first order with a buyer in Germany. Before confirming the purchase, the buyer wants a formal document showing the product, quantity, price, currency, shipping terms, and payment details.
That is where a proforma invoice comes in.
A proforma invoice looks similar to a commercial invoice, but it is issued before the final sale is completed. It helps both sides confirm the proposed transaction before the exporter raises the final commercial invoice.
This guide explains what a proforma invoice should include, how to format one for exports, and when to use it instead of a commercial invoice.
That is where a proforma invoice comes in.
A proforma invoice looks similar to a commercial invoice, but it is issued before the final sale is completed. It helps both sides confirm the proposed transaction before the exporter raises the final commercial invoice.
This guide explains what a proforma invoice should include, how to format one for exports, and when to use it instead of a commercial invoice.
TL;DR
- A proforma invoice is a preliminary document sent before the final sale or shipment to show the proposed goods or services, price, currency, payment terms, and other commercial details.
- It is not a replacement for the final commercial or GST invoice used once the actual supply takes place.
- Export proforma invoices should include buyer and seller details, product description, quantity, price, currency, HS code where relevant, Incoterms, shipping information, payment terms, and validity.
- A reusable Word, Excel, or Google Sheets template can make the process faster while reducing formatting and calculation errors.
What is a proforma invoice?
A proforma invoice is a preliminary invoice issued before a transaction is finalised.
It is commonly used to give the buyer a detailed view of the proposed sale before they confirm the order, make an advance payment, or issue a purchase order.
It can include:
- seller and buyer details
- goods or services
- quantity and unit price
- total value and currency
- shipping terms
- Incoterms
- payment terms
- expected dispatch
- payment details
- validity period
Proforma invoice vs commercial invoice
| Proforma invoice | Commercial invoice |
|---|---|
| Issued before the transaction is finalised | Issued for the actual sale or supply |
| Acts as a preliminary invoice or formal quotation | Records the final transaction |
| Can be revised if terms change | Reflects the final agreed terms |
| Often used for advance payment or order confirmation | Used for accounting, customs, and trade documentation |
| Does not replace the final GST/export invoice | Must meet applicable invoice requirements |
A typical export flow may look like:
Enquiry → Proforma invoice → Buyer confirmation → Supply or shipment → Commercial invoice → Payment
When should you use a proforma invoice?
A proforma invoice is useful when the buyer needs detailed commercial terms before the transaction becomes final.
Common situations include:
Before a purchase order
The exporter sends the proforma invoice so the buyer can confirm quantity, price, currency, Incoterms, and payment terms.
When advance payment is required
If the exporter asks for an advance before production or shipment, the buyer can use the proforma invoice to arrange payment.
What should a proforma invoice template include?
| Field | What to include |
|---|---|
| Document title | Clearly write PROFORMA INVOICE |
| Reference number | A unique reference such as PI-2026-014 |
| Date and validity | Issue date and quotation expiry |
| Seller details | Business name, address, GSTIN and IEC where relevant |
| Buyer details | Legal name, address and country |
| Description | Clear product or service details |
| HS/HSN code | Where applicable for goods |
| Quantity and unit price | Number of units and price per unit |
| Currency | USD, EUR, GBP, INR, etc. |
| Total value | Including freight or other charges where relevant |
| Incoterm | Such as FOB, CIF, FCA or DDP, with named place |
| Payment terms | Advance, balance, due date and method |
| Payment details | Bank or collection instructions |
How do you create a proforma invoice?
You can create one in Word, Excel, Google Docs, Google Sheets, or an invoicing tool.
Step 1: Add the basics
Include PROFORMA INVOICE, reference number, issue date, validity, and seller and buyer details.
Step 2: Add the product or service table
Use the following headings as columns on Google Sheets or Excel to add your product or service details:
- Description
- HS Code
- Quantity
- Unit Price
- Amount
Step 3: Add currency, shipping details and trade terms
Always state the currency clearly.
For goods exports, use the Incoterm with a named place, for example:
FOB Nhava Sheva, Incoterms 2020
rather than simply writing FOB.
For shipping details, include details such as:
- Country of origin
- Port of loading
- Port of discharge
- Estimated dispatch time
- Shipping or delivery address
Step 4: Add payment instructions
State the advance, balance, due date, payment method, and current bank or collection details.
Step 5: Export as PDF
Once the invoice is complete, export it as a PDF before sharing it with the buyer. PDF is the preferred format for invoices because it preserves the document’s layout, fonts, tables, and calculations across devices and makes accidental edits less likely.
Should a proforma invoice include GST?
A proforma invoice is not the final GST tax invoice.
The proforma invoice can show the proposed tax treatment where useful, but it should not replace the final GST-compliant invoice.
Should a proforma invoice include HS code and Incoterms?
For goods exports, usually yes.
An HS or HSN code helps identify the product classification, while Incoterms clarify how costs, responsibilities, and risk are divided between buyer and seller.
Can a buyer pay against a proforma invoice?
Yes. Proforma invoices are commonly used to request advance payment.
Once the actual supply takes place, the exporter should issue the appropriate final commercial or tax invoice.
Common proforma invoice mistakes
Not labelling it clearly
Always mark the document PROFORMA INVOICE.
Leaving out the currency
A total of 10,000 is incomplete unless the buyer knows whether it is USD, EUR, GBP, INR, or another currency.
Omitting the Incoterm or named place
FOB alone is incomplete. Add the agreed port or location.
Forgetting validity
A validity date protects the exporter when freight, FX, or input costs change.
Using outdated payment details
Verify bank or collection details every time a template is reused.
Proforma invoice checklist for exporters
Before sending the document, check:
- It is clearly marked PROFORMA INVOICE
- Reference number, date, and validity are correct
- Seller and buyer details are accurate
- GSTIN and IEC are included where relevant
- Product or service description is clear
- HS/HSN code is checked where applicable
- Quantity, unit price, total, and currency are correct
- Incoterm and named place are included where relevant
- Payment terms and payment details are current
- Final PDF has been reviewed before sending
How proforma invoices connect to international payments
For exporters, the proforma invoice often becomes the first document in the payment trail.
The payment system should make it easy to identify which customer paid, in which currency, against which invoice, and what amount was ultimately settled.
PayGlocal helps Indian businesses collect international payments and maintain clearer transaction and settlement records, making it easier to connect overseas payments with the invoices and customers behind them.
