Pro forma invoice vs. commercial invoice: Which to use and when.

Learn the difference between a pro forma invoice and a commercial invoice to understand which one works for your individual business, how best to use it, and when it should be sent.

Pro forma and commercial invoices are most often used in global trade. Basically, the main distinction is that one is used as an estimate, and the other as a request for final payment. A pro forma is used before goods are shipped and no payment is required. A commercial invoice is sent after the goods have been delivered and now, it is time to pay.

Differences between pro forma and commercial invoices.

“Pro forma” means “as a matter of form” and is the term used for an invoice that estimates the price or goods of services in advance of shipment or delivery. You can issue a pro forma in situations where it’s impossible to give your customers an exact price, but you’re still able to give them a general idea of the costs involved.

If you import goods as part of your business, you can use a pro forma to estimate their value for customs clearance, but you’ll still need to supply a commercial invoice within 180 days.

Can a pro forma invoice be used for customs clearance?

Is a pro forma invoice or commercial invoice used for customs clearance? In most cases, a pro forma invoice can be used for customs clearance purposes, as it is very similar to a commercial invoice. This important document can be used for a variety of different purposes per the International Trade Administration, including:

• Applying for an import license or permit
• Opening a letter of credit related to the goods and services
• Transferring hard currency related to the goods and services
• Applying for a contract for pre-shipment inspection
  • This may be required for certain goods and services, and may need to be booked well in advance of the shipment.

What is a commercial invoice?

Because commercial invoices are documents issued after goods have been shipped or delivered, once the sale is completed, it serves as a legal record of the transaction.

This type of invoice also contains substantially more detail than a pro forma, including information about the buyer and seller, purchase location, and a complete description of the goods. Plus, if you’re dealing with international shipments in your business, the use of a commercial invoice is actually required.

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