Proforma Invoice Format
Proforma Invoice is a document that sellers issue before providing an actual invoice. It contains the list of goods or services (yet to be delivered) along with their prices. A proforma invoice is more formal than a quotation and less legal than an invoice.
When a customer approaches a business for XYZ product and asks for a rough estimate of the bulk product price, the seller provides a quotation, typically an approximate value of the goods. Suppose the buyer is interested in the quote and asks for a final estimate. In that case, the seller then provides a proforma invoice, which includes other details of the sale like tax rate, discount, delivery charges, etc., in addition to the basic product price. Once the customer is interested in the final details of the deal, he confirms the proforma invoice. The seller then delivers the goods and provides a commercial invoice.
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Purpose of Proforma Invoice Format
A proforma invoice declares the seller’s commitment to delivering the desired products/services to the prospective customer. On the other hand, it informs the buyer about the product and payment details.
Proforma invoices are particularly crucial when two enterprises enter into a business agreement for the first time. They act as an informal binding agreement between the two parties, where both are aware of the terms and conditions of doing business.
While a quotation just contains very basic details of the sale like the product price, shipping, etc., the proforma invoice format adds more details, making the sale more apparent to the buyer. It informs the buyer of the estimated sale price of a product/service yet to be delivered, the total cost of the shipment, contents of a shipment, their value, shipping costs, and other important details. If there is any mismatch, the buyer can raise an objection, and the same can be revised before the actual invoice is generated.
In some businesses, the actual invoice is generated only when the payment is received. In such cases, the company provides the proforma invoice first, and once the payment gets credited, it generates the invoice.
Proforma Invoice Format as per GST Norms
A proforma invoice format is not a legal document. GST does not consider it a valid sale document; hence, it is not required to be reported under any returns. Neither the seller nor the buyer is required to pay GST on proforma invoices.
Since the proforma invoice format is not an actual invoice, there is no need to add it to the accounting books of either the buyer or the seller. However, after the introduction of GST, there are a few changes to the proforma invoice format. Compared to the previous version, the current proforma invoice contains the GST number instead of the VAT/Sales Tax numbers. It also displays the HSN code of the product or the SAC code of service. It also includes the CGST, SGST, and IGST, if necessary.
Is Proforma Invoice Mandatory
A Proforma invoice is not mandated by the law and is purely offered to establish good faith between the buyer and seller. There’s no standard industry guideline dictating the proforma invoice format – it may even look like a sales invoice. However, businesses must have a standard proforma invoice format to make it consistent across all business transactions.
Businesses can create proforma invoice formats in Word, proforma invoice formats in Excel, and proforma invoice formats in Google docs on their own. They can also download proforma invoice format directly from the internet from reliable sources like myBillBook and others. Another interesting option is subscribing to billing software that generates free proforma invoices whenever necessary.
If you wish to create a proforma invoice format on your own, make sure all the contents listed below are included in the document. Another important thing to remember is a proforma invoice must be marked as ‘Proforma Invoice’ to indicate that this is not the final sale invoice. Also, include the phrase ‘This is not a GST invoice’ to avoid any confusion on the part of the customer. If it is marked as a ‘Sales Invoice’ by mistake, it becomes a legal document and is liable for GST returns.
Proform Invoice Format – What to Include
A proforma invoice format needs to be concise and informative. It should only present the details that are relevant to the customer.
- The header must contain – Proforma Invoice or Proforma Order
- Supplier’s Company name and logo
- Invoice number (not mandatory)
- Date of issue of the invoice
- Seller’s address and the prospective buyer’s address
- Description of product/services, including the unit costs and total of the list items
- Validity of the invoice (Typically 30 – 60 days)
- Proposed terms of sale, payment, and delivery
- The certifications required (if any) by “Customs Authorities”
- Signature of the seller or any other authorised personnel of the company
Free Proforma Invoice Formats Online
Many sources today provide proforma invoice formats for free, but selecting the right source is key. The free resources may not allow customisation, so you have to download the format and fill it with details before using it.
Some online websites also provide proforma invoice generators. You need to fill in all the information online, and the tool will generate the invoice. Then you can either print or download it. The major drawback is data security. You are not sure where your business data gets stored.
myBillBook to Create Proforma Invoices
Businesses can opt for one reliable, risk-free option to create proforma invoices. With the advancement of technology, the trend of billing and accounting softwares is rising.
myBillBook is one such billing software offering an array of billing solutions for small and medium enterprises at a minimal cost. All you need to do is just download either the mobile application or the desktop application, and you’re all set to take your billing and accounting tasks online.
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Features of myBillBook Proforma Invoice Generator
- Create Proforma Invoices in Seconds: myBillBook is a complete billing solution that allows users to create sales invoices, quotations, delivery challans, and proforma invoices in just a few clicks. The app provides pre-defined formats for all kinds of invoices, and all you need to do is simply choose the kind of invoice you want to generate, enter the details, and your invoice will be ready in seconds.
- Invoice themes: You don’t have to stick to the same standard proforma invoice format that every other business uses. myBillBook offers personalised invoice formats in various themes. You can choose from 7 different themes and 8 colour options while creating the proforma invoice. The customisation feature allows you to create GST and non-GST invoices in your preferred colours and styles.
- Add and remove fields: Users can add and delete fields and make the invoice as per their business requirements. Some pre-defined fields can be added by simply enabling them in the settings, and any other custom fields can be included by using the ‘Add Custom Field’ button.
- Convert Proformas into sales invoices: Another interesting feature offered by myBillBook is that once the deal gets confirmed, you can simply convert the proforma into a sales invoice using a single click. The ‘Convert to Invoice’ option allows users to convert proforma invoices into sales invoices in just seconds. No more hassle of entering the information all again to create an invoice.
- Download, Print or Share: Once the proforma invoice is created and saved, you have multiple options to send it to your customers. You can either download and share it through e-mail, directly print and hand it over, send it as an SMS or share it through Whatsapp. All these options are readily available on the app. You can also edit the invoice whenever required, create a duplicate of it or simply save it for later use.
- Safe and secure platform: myBillBook is an ISO-certified application that provides 100% data security to its users. All the information entered on the platform is end-to-end encrypted to prevent malware and virus attacks. Only authorised users have access to the information, thus making it completely safe and secure. The application also takes timely data backups to prevent data loss and to provide multi-device access.
When you subscribe to myBillBook billing software, you’re not just receiving a proforma generator tool; but an end-to-end billing and accounting software that would do much more than you can imagine.