Proforma vs Commercial Invoice
They look almost identical, they share the word "invoice," and mixing them up causes real problems — delayed shipments, confused clients, and accounting headaches. But a proforma invoice and a commercial invoice do completely different jobs: one is a preview of a deal, the other is a record of one. Here's how to tell them apart and when to use each.
What is a proforma invoice?
A proforma invoice is a preliminary bill of sale sent before goods are delivered or work is completed. Think of it as a formal, detailed quote: it tells the buyer exactly what they'll get and what it will cost, so they can approve the deal, arrange payment, or clear internal purchasing processes.
Key facts about proformas:
- It's not a demand for payment — or rather, it's not a tax document recording a completed sale. (It can be used to request an advance payment, but it doesn't replace the real invoice later.)
- It's not recorded the same way — in most jurisdictions a proforma isn't a valid VAT/GST document and shouldn't be entered in accounting books as a sale.
- It must be clearly labeled "PROFORMA INVOICE" so nobody mistakes it for the real thing.
- Contents mirror a real invoice: seller and buyer details, item descriptions, quantities, prices, estimated totals, and proposed payment terms.
What is a commercial invoice?
A commercial invoice is the real thing: the formal payment demand issued after (or at the point of) delivering goods or completing services. It's the document the buyer's accounting department actually pays against, and in international trade it's also the document customs authorities use to assess duties.
Key facts about commercial invoices:
- It creates the receivable — this is the document that says "you owe this amount by this date."
- It's a tax document — it must carry sequential numbering and, where applicable, VAT/GST numbers and tax breakdowns.
- For cross-border shipments, it additionally needs country of origin, harmonized tariff codes, and shipping terms (Incoterms) for customs clearance.
If you've read our guide on how to write an invoice, everything there describes a commercial invoice — that's the default meaning of "invoice."
Side-by-side comparison
- Purpose: proforma = preview/quote for approval · commercial = payment demand and sale record.
- Timing: proforma = before delivery · commercial = at or after delivery.
- Payment: proforma = may request a deposit but isn't the final bill · commercial = states the amount due and due date.
- Tax status: proforma = generally not a valid tax document · commercial = the official tax document.
- Numbering: proforma = can use a separate sequence (e.g., PF-001) · commercial = must follow your sequential invoice numbering with no gaps.
- Customs: proforma = sometimes accepted for estimated duties, but commercial = required for final clearance.
When to use each: three scenarios
Scenario 1 — a client wants a formal quote before signing. Send a proforma. It looks official enough for their procurement process but commits neither side the way a contract does.
Scenario 2 — an overseas buyer needs to arrange a letter of credit. Send a proforma first (their bank needs the details to open the credit), then the commercial invoice with the shipment.
Scenario 3 — you finished the work and want to be paid. Commercial invoice. Always. A proforma at this stage just delays payment because the client's accounting team can't process it as a payable.
Common mistakes to avoid
- Charging VAT on a proforma in jurisdictions where it isn't a tax document — it creates accounting confusion for both sides.
- Using proforma numbering for real invoices (or vice versa). Keep two separate sequences so your books stay clean.
- Forgetting to convert the proforma into a real invoice after the client approves. The deal isn't billed until the commercial invoice goes out.
- Sending a commercial invoice before terms are agreed — that's what the proforma stage is for. Agree first, bill after.
Proforma vs commercial invoice FAQ
Can a proforma invoice be used for payment?
It can request an advance or deposit, and buyers do pay against proformas in some industries — but it doesn't replace the commercial invoice, which must follow for proper accounting and tax records.
Does a proforma need an invoice number?
Give it its own clearly-labeled sequence (PF-001, PF-002) so it never gets confused with your real, sequential invoice numbers.
Which one does customs want?
Customs ultimately works from the commercial invoice. A proforma can support early estimates, but final duty assessment needs the real document with accurate values.
I'm a freelancer — do I ever need a proforma?
Rarely. Freelancers usually work with quotes/estimates (see invoice vs quote vs receipt) rather than formal proformas. Proformas matter most in product sales and international trade.