A proforma invoice, which is a Latin phrase meaning “for form’s sake”, is a preliminary invoice issued before a product or service has been delivered. It serves as a non-binding agreement between the seller and the buyer, outlining the terms of the sale and the amount due.
Proforma invoices are a crucial tool in international trade, as they help to establish the value of goods for customs purposes and prevent delays in the shipment process. They also provide buyers with a clear understanding of the costs involved in the transaction, allowing them to make informed decisions. Historically, proforma invoices have been used to facilitate trade between countries with different currencies and tax systems.