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Why payments cannot be made on proforma invoices. For starters, a proforma invoice is not an official document. This means that the customer isn't obligated to pay the amount on the proforma invoice. Proforma invoices don't meet the requirements for an invoice.

The proforma is more like a replica of a commercial invoice. It rids a buyer/retailer/customer from being exposed to unexpected or unfair charges during the final transaction stage. You need not pay GST for this kind of invoice. Instead, you will only pay tax for a guaranteed GST invoice.

A proforma invoice is issued when a seller has discussed the preliminaries of a sale with the buyer but cannot proceed to send an official invoice since the final details of the deal aren't confirmed by the buyer yet. A proforma invoice can be issued to let the buyer know what exactly to expect from the seller.

Once the final proforma invoice is accepted by the buyer, it should be signed by the authorized buyer/importer and returned to the exporter. The importer generally follows by submitting a Purchase Order.

A proforma invoice should not have an invoice number. Invoice numbers are reserved for completed invoices. Once a proforma invoice is finalised, the completed invoice should follow your invoice number sequence. The issue date of the proforma invoice doesn't need to match the date of the finalised invoice.

How Do You Use a Proforma Invoice?Download your free proforma invoice template.Add your name, your business name and your contact information.Customize with your business branding and logo.Fill out the customer's name, business and contact details.Include a unique invoice file number, invoice date and payment due date.More items...

A proforma invoice is also sent to a customer before your products are delivered or your services provided, but it is considered more binding than a quotation although not legally binding like a completed invoice.

A pro forma invoice is not an original/tax invoice. Therefore, it does not have any legal validity. Hence it does not legally bind either party in a supply transaction.

When accepted in their entirety by buyers, proforma invoice often become the offer and even act as a sale contract.

Note: only after a pro forma invoice is converted into a true invoice will its value be registered in your account. This is because, until that point, there is no guarantee the customer will agree to your terms.