What is the Purpose of a Proforma Invoice?

Do you want to present your services and rates in detail to one of your prospects, but without going directly through the contractual stage of a quote? The proforma invoice can prove ideal for progressing gradually in a commercial negotiation, without rushing the client. Discover how to use a proforma invoice, the advantages it offers, as well as how to properly draft it according to French standards.

Understanding the proforma invoice

Definition

The proforma invoice, in other words "for form's sake", constitutes a commercial document presenting the rates and presentation of services provided or goods offered, as well as the general terms of sale. It allows progress in a sales process without pressuring the prospect, even though having no legal value, the proforma invoice absolutely cannot serve as a contract. It is simply a draft summary of a commercial offer.

Specificities

Ideal for a proposal of service provision or sale of goods, it will however be abandoned by construction professionals in favor of quotes. It can also be used as part of a desire for B2B commercial exchange, and will be modifiable as negotiations progress, until the establishment of a contract with legal value such as a quote. It is a provisional invoice that must absolutely not be accounted for with standard invoices.

Enjoy the advantages of the proforma invoice

Present a negotiable commercial offer

Thanks to the proforma invoice, your company can present the details (price, quantity, etc.) of supplies or services offered to a potential client (prospect) or to a client in the case of a new order. This allows the client to be well informed about what they wish to order as well as to negotiate with your company to reach a commercial agreement. A well-informed client or prospect will thus be more confident in placing an order.

Avoid disputes with customers

The proforma invoice helps avoid any disagreement due to misunderstanding, since it clearly indicates everything the client needs to know before ordering: nature of the service, quantity of goods or even the amount potentially invoiced. The general terms of sale (GTS) provided with the proforma invoice also ensure that the client properly takes them into account when ordering, whether concerning delivery times or payment method.

Finally, once the sales negotiation is complete, it will be mandatory to provide a standard invoice to the client, as well as ideally a quote or purchase order to protect both parties before beginning this commercial exchange.

Obtain a loan

If your company wishes to apply for a loan from a bank, a proforma invoice from different service providers or suppliers may be requested. It will allow a concrete presentation of your project, an effective evaluation can thus be carried out by the financial institution.

Declaration of goods at customs

Whether in the context of a commercial exchange in import or export, customs may request a proforma invoice to allow the purchase or sale concerned. This makes it possible to clearly declare the value of the products.

Benefits for the client

The client is not bound by any contractual clause as long as no quote, invoice or purchase order has been established. This therefore allows the prospect or client making a new order to negotiate, but also to compare offers between different service providers or sellers.

Establishing a proforma invoice in Belgium

Drafting rules

No need to search the internet for a proforma invoice template and know the mandatory mentions, rather use our online software which includes all these mentions

For information, the denomination "proforma invoice" must replace that of "invoice". The mandatory mentions that must appear on the document are:

• the denomination "Proforma Invoice"
• supplier information
• client information
• the document creation date
• document numbering
• order details (service, goods, quantity, price excluding tax and including tax)
• VAT
• payment terms (deadlines, payment methods, discounts, etc.)
• document validity period
• terms of sale

In case of an international sale, it will also be necessary to specify the currency and Incoterm delivery terms.

Essential points

The proforma invoice must absolutely be considered as such, no more, no less:

• do not account for it with the rest of the company's invoices, since it has no legal value;
• do not confuse it with a contract, since it obliges nothing, neither the supplier nor the consumer;
• always assign it a numbering clearly distinct from final standard invoices
• always create a standard invoice after agreement with the client, if possible contractual agreement using a purchase order or quote;
• always clearly name it "proforma invoice" and not simply "invoice".

To remember

The proforma invoice has no contractual legal value, but simply serves as an informative commercial document on the details of a commercial offer as well as the general terms of sale specific to the company. It has great utility for companies wishing to convince a prospect to begin a commercial negotiation process and thus reach a sales contract. It will also prove useful for clients, who will be properly informed or can compare with the competition. Finally, even if the proforma invoice is a document without value and not accountable in the company's accounting entries, it must be correctly drafted to be 100% transparent.

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If you would like more information you can also contact us, we will be happy to help you