Many companies send a document to their client even before actual payment takes place. This happens when an order needs to be confirmed, an advance payment is requested, or the amount to be paid needs to be clarified. This is precisely when a proforma invoice is most commonly used.
In practice, quite a few people confuse it with a regular invoice, especially since it looks almost identical. However, the distinction is important because a proforma does not carry the same accounting and tax value.
The proforma invoice itself is used by small businesses, online stores, agencies, freelancers, and companies working with advance payments or international clients. It helps both parties clarify the terms of a deal before issuing the final document.
What is a proforma invoice?
A proforma invoice is a preliminary document that outlines the service or goods to be paid for. It includes the products, prices, quantities, and payment terms.
Although it looks almost like a standard invoice, it is not a final accounting document. The proforma invoice primarily serves to provide information and clarify payment between the two parties.
It is used when a client wants to see the amount first before transferring funds. This is very common when dealing with advance payments, contract services, or international orders.
What are the applications of a proforma invoice?
Proforma documents are used in various situations, especially when a payment is upcoming, but there is no basis yet for a final invoice.
For advance payments
Many companies send a proforma invoice for an advance payment before starting work on a project or shipping goods. This way, the client sees the exact amount and payment terms. Once the amount is transferred, the actual invoice is issued.
As a client quote
Sometimes a client requests a document with a specific price before making a decision. In these cases, the proforma is used as a more official version of a quote.
For international transactions
When working with foreign clients, a proforma invoice serves to preliminarily clarify costs, transport, and delivery terms.
Is a proforma invoice a tax document?
No. A proforma invoice does not have the status of a tax document and does not replace a real invoice.
It is not submitted to the tax authorities and on its own does not create an accounting event.
Can tax credit be claimed using a proforma invoice?
No, you can't. Even when a document includes VAT, this does not grant the right to a tax credit.
Is a proforma invoice accounted for?
No, it is not accounted for like a standard invoice because it does not act as a final accounting document.
What is the difference between an invoice and a proforma invoice?
Many people want to know the difference between a proforma and an invoice because both documents look similar but serve different purposes.
Document Type
An invoice is an official document, whereas a proforma is for informational purposes only.
Accounting Value
A standard invoice is used in accounting and reporting. This does not apply to a proforma invoice.
Payment Basis
Both documents can be used to request payment from a client.
Numbering
Many companies use a separate numbering sequence for proforma invoices.
Legal Weight
A proforma invoice does not carry the legal weight of a tax invoice.
When is a proforma invoice issued?
Most commonly, a proforma is issued before actual payment or before a service is activated.
Before advance payment
This is one of the most common scenarios for issuing a proforma invoice for an advance payment.
Before service activation
Some companies wait for payment before starting work or activating a subscription.
When the client requests a preliminary document
Sometimes the client themselves requests a document with the exact amount before making the transfer.
Can a proforma invoice include VAT?
Yes, a proforma can show an expected amount with VAT if the supplier is registered for VAT and the actual invoice will include added VAT. However, simply showing VAT on the proforma does not make it a tax invoice and does not grant the right to a tax credit.
Include an example:
Common mistakes with proforma invoices
Working with proforma invoices often involves a few common mistakes.
Treating the proforma as a real invoice
Some companies mistakenly believe a proforma document is sufficient and fail to issue a final invoice.
H3: Failing to issue a real invoice after payment
Once payment is received, an official document must be issued. This is often overlooked when working manually or using Word templates.
How does Inverso.bg make issuing proforma invoices easier?
When document volume starts to grow, manual work begins to slow down the entire process. This is especially true for advances, monthly services, and working with various clients.
Inverso.bg helps make creating proforma invoices faster and more organized. Client details are saved, documents are easier to find, and the risk of manual errors is reduced.
This is effective for companies that want a more professional look for their documents, easier delivery to clients, and better control over payments. Additionally, it eliminates the need to work with various Word and Excel files that are easily confused or lost.
Inverso.bg is suitable for businesses that want to manage the invoicing process more easily — from creating a preliminary document to sending the invoice to the client and tracking payment. This is especially useful when working with advance payments, monthly services, B2B clients, and international orders.
Focus on:
faster document creation;
lower risk of manual errors;
more professional appearance;
easy sending to the client;
better control over payments;
less work with Word/Excel templates.
Frequently asked questions about proforma invoices
Can a proforma invoice be cancelled?
Yes. Since it is not a final accounting document, a proforma can be changed or cancelled if needed.
What is the difference between a proforma invoice and a quote?
A quote is a more flexible document, whereas a proforma invoice contains more specific payment details and looks closer to a real invoice.
Can a proforma invoice be used for tax credit?
No. Tax credit can only be claimed using an official invoice, not a proforma document.
