You may be required to create a pro forma invoice as part of your business activities. This special invoicing document is mandatory in certain cases—in particular at the customer’s request and with any import/export activities. How does it differ from a standard invoice? And what are the regulations that need to be considered? Below, you can find all the information you need about the function of a pro forma invoice and how to create one.

What’s in this article?

• What is a pro forma invoice?
  
• What is the purpose of a pro forma invoice?
  
• Is a pro forma invoice mandatory?
  
• What information is required on a pro forma invoice?
  
• Where can I find a pro forma invoice template?
  

What is a pro forma invoice?

A pro forma (i.e., “for the sake of form” in Latin) invoice is a provisional invoice that has no commercial value; therefore, it cannot be paid. It exists solely “for the sake of form,” and it provides details on the terms and conditions of sale (in the same way as a quote). Whereas a quote becomes contractual once it is accepted, a pro forma invoice does not commit either the customer or the professional to a commercial relationship. Created exclusively for informational purposes, this document is intended to inform potential customers of the nature of the commitment being proposed by the seller. It can be amended and negotiated, and it has no legal, accounting, or fiscal value.

What is the purpose of a pro forma invoice?

A pro forma invoice is important in international trade: it is used to notify the customs authorities of the type and value of the goods in transit. It is also used as evidence by the customer when applying for an advance or credit from their bank. The document allows the bank to verify the customer’s legitimacy and eligibility before lending them a sum of money.

A pro forma invoice is also useful during business negotiations. It allows the customer to assess the sales proposal by comparing it with offers put forward by other suppliers. Both parties are able to amend the document as required as their negotiations progress, with no formal commitment. A standard invoice must then be issued if they do decide to enter into a commitment.

Any businesses that are exempt from VAT can use a pro forma invoice as evidence of its commercial activities for the tax office.

Is a pro forma invoice mandatory?

Drawing up a pro forma invoice is a mandatory requirement for certain import/export activities. This is the case for imports of new vehicles, intracommunity shipments of works of art, and exports of explosives to countries outside of the EU. A pro forma invoice is also mandatory if a customer requests it for presentation to their bank (e.g., for a loan).

What information is required on a pro forma invoice?

The contents of a pro forma invoice are generally similar to those in a standard invoice, except that they must begin with the words “Pro forma invoice.” The pro forma document must include the company’s address and other contact details, as well as those of the potential customer: name, business name, address, SIREN number, and VAT number (if applicable). The date that the invoice was issued and the invoice number are also required (note that pro forma invoices are numbered independently from standard invoices).

A pro forma invoice must include a detailed breakdown of the business proposal, with a description of the planned service or product, as well as the quantity; unit price; price of labor and materials required (if applicable); the total price exclusive of taxes; the applicable VAT rate; the amount of VAT; and the total price including all taxes (if applicable). If the company is not liable for VAT, it must state “TVA non applicable, art. 293 B du CGI” (“VAT not applicable, art. 293 B of the French General Tax Code”).

Specific information

Other important information to be included on your pro forma invoice includes any potential discounts; payment methods; payment terms and delivery deadlines; penalties for any delays; the terms and conditions of sale; and the validity period for the proposal—provided that these are relevant to your transaction.

If the transaction involves an international business activity, you also need to specify the invoicing currency and the international commercial terms (Incoterms); the location where the goods are due to be collected; your business insurance number; and the transfer of title.

Where can I find a pro forma invoice template?

You can follow the pro forma invoice template provided by La Poste, or download invoicing software that will help you create the invoice. The Stripe Invoicing solution also lets you automate customized invoices and processing for all types of invoices, allowing seamless integration with your CRM software (and without requiring any line of code). Speak to a Stripe expert today to see how you can simplify your end-to-end invoicing process.