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Whereas the proforma invoice is like a quotation, is not legally binding and is sent before the sale and details have been confirmed. A sales invoice can also serve as a tax invoice, since it includes VAT/GST and other taxes. The final sales invoice can be used to reclaim VAT/GST.

Like a regular invoice, proforma invoices should include contact details, a date of issue, a description of the goods or services provided, the total amount due, and any VAT. They might also include payment terms such as which methods of payment you accept and when payment is expected.

What Is the Difference Between an Invoice and Proforma Invoice? While an invoice is a commercial instrument that states the total amount due, the proforma invoice is a declaration by the seller to provide products and services on a specified date and time.

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

Why payments cannot be made on proforma invoices For starters, a proforma invoice is not a legal document. This means that the customer has no legal obligation to pay the amount on the proforma invoice.

Because proforma invoices are not official invoices (they should always be marked as 'Proforma' and do not have an invoice number), it is not necessary to create a credit note to cancel or change a proforma invoice.

The pro-forma invoice is issued before sales takes place. Once after receiving pro-forma invoice from the supplier, the buyer sends a purchase order or opens a letter of credit to the supplier.Based on such pro forma invoice, buyer release a Purchase order to seller as confirmation of purchase of his goods.