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.

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

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?

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.