What it is
A proforma invoice is a commitment to what you *will* charge, issued before the supply happens. It exists so the buyer can act — raise a purchase order, get an advance released, open a letter of credit, clear a budget — using a document that states the final numbers.
It is not a demand for payment and it is not a tax document. No GST liability arises from issuing one, and the recipient cannot claim input tax credit against it, however much tax the document displays.
Write the words “Proforma Invoice” on it. A proforma that is not labelled as one is a tax invoice as far as the person filing it is concerned, and that mistake is discovered at reconciliation.
Proforma, quotation, tax invoice
| Quotation | Proforma | Tax invoice | |
|---|---|---|---|
| Sent | Before agreement | After agreement, before supply | At or after supply |
| Purpose | An offer | A commitment | A demand for payment |
| Negotiable | Yes | Rarely | No |
| Creates tax liability | No | No | Yes |
| Supports input tax credit | No | No | Yes |
The practical distinction between a quotation and a proforma is certainty. A quotation invites a decision; a proforma records one that has already been made and puts it in a form the buyer's finance team can process.
What to put on it
A proforma should carry everything the eventual tax invoice will, so that nothing changes between the two except the heading and the number:
- The words “Proforma Invoice”, prominently.
- Your details and the buyer's, in full.
- A proforma number from its own series — PI-202608-001, not your invoice series.
- A validity date. A proforma without one is a price you have quoted forever.
- Line items, quantities and rates exactly as they will appear on the invoice.
- The tax that will be charged, shown as it will be charged.
- Payment and delivery terms, and bank details if an advance is expected.
Keep the proforma series separate from the invoice series. They are different documents and mixing them puts gaps in the sequence that is required to be consecutive.
Turning it into an invoice
- 01Confirm the supply has actually happened, or that you are within the window to invoice for it.
- 02Switch the document type from Proforma to Invoice.
- 03Let the number change to your invoice series — do not carry the PI number across.
- 04Re-date it to the date of supply, not the date of the proforma.
- 05Check the tax split still matches the place of supply, which can change if delivery changed.
- 06Reference the proforma number in the reference field, so the buyer can match the two.