Pro Forma Invoice is a preliminary document issued by a seller to a buyer outlining the details of goods and estimated costs before the actual sale.
How It Works:
- The seller prepares the document before shipment.
- It includes product details, pricing, and terms.
- The buyer reviews and confirms the order.
- It is used for approvals or financing.
Benefits:
- Provides clarity on transaction terms prior to finalization
- Facilitates buyer approval and financial planning
- Supports application for trade finance and regulatory approvals
- Reduces ambiguity in international transactions
Example:
A seller issues a pro forma invoice to a buyer before finalizing an export order.