Proforma Invoice Vs Commercial Invoice

There are two types of invoices commonly used by businesses in export and import: Proforma Invoices & Commercial Invoices. These are the two most important documents.

Curious to know the responsibilities of each invoice for your business? Keep on reading!

Proforma invoices and commercial invoices are key to business for import and export businesses. These are the two very important documents while dealing with clients. Every time there is a business deal finalized the buyer has to send in purchase order to the vendor. He could also open a letter of credit.

Before the buyer can issue a letter of credit to the vendor, he has to send a pro forma invoice to the buyer. This document contains all the necessary information and terms pertaining to the sale.

The Proforma invoice is the document that shows a commitment on the part of the seller to sell the goods according to the pre-decided terms and conditions.

Once a proforma invoice is issued to the buyer, he has to issue a purchase order. Once the seller receives the purchase order, he gets a confirmation to send the goods. He now ships the goods to the buyer along with a commercial invoice. The commercial invoice is more like the legal document of the actual sale.

In some countries, a proforma invoice is accepted in lieu of a commercial invoice to process import customs procedures to release cargo out of the country. 

A Commercial Invoice document is issued to the buyer after the goods have been delivered or shipped. Also, the commercial invoice format is essentially the same as a proforma invoice. But importantly, the commercial invoice confirms the exact quantity of the products that have actually been loaded and shipped.

An example is best to explain the difference - let's say you have a plumber come to your house to fix your plumbing - after they finish the job they may give you a handwritten invoice out of their invoice book while on-site and then later in the day they may email you a more formal invoice from their bookkeeping software back at their office.

In this example, the invoice given to you on-site would be the proforma invoice and the invoice emailed to you later in the day would be the commercial invoice.

-Gazi Sanaul Hasan