Proforma vs. Commercial Invoice: What's the Difference?

A typical export process includes the use of both the proforma and commercial invoices. Shippers who don’t know better may think the two forms are interchangeable—but they’re not. Let us explain.

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Proforma vs. Commercial Invoice: 3 Key Differences

Despite the fact that a proforma and commercial invoice may look very similar, there are three key differences between the two documents:

1. When They Are Issued

After a company receives an inquiry about one or more of their products from a potential international customer, they issue a proforma invoice as a quote not only outlining the cost of the goods but also the terms of the sale. The potential buyer can accept the price and terms outlined in the proforma invoice or make a counteroffer in an attempt to negotiate.

2. What They Include

While the kind of information that appears on both types of invoices may be similar, the commercial invoice should represent the final, agreed upon details of the transaction including any necessary additional export or import control information.
In the absence of a formally negotiated and agreed upon sales contract, the proforma and commercial invoices are part of the paper trail that encompass the contract between the buyer and the seller.

3. How They Are Used

The proforma invoice is used by the buyer and the seller to negotiate the price and the terms of the sale. It may also be used by the buyer to obtain any necessary import permits, overcome any potential import restrictions and arrange for a letter of credit or some other payment process.

The commercial invoice is not only an instrument for collecting payment, it is also used by customs agencies for identifying appropriate duties, taxes and other import fees, and ensuring compliance with export requirements. It also provides necessary information for moving the goods from the seller to the buyer.

The Bottom Line: Commercial vs. Proforma Invoices

If you create the proforma correctly, the difference between a proforma and commercial invoice may be minimal. Both are important to your exporting process, and both are among the dozens of export documents that you can create quickly and easily using Shipping Solutions export documentation and compliance software.

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Chapters
00:00 Introduction
00:42 Proforma Invoice
01:42 Commercial Invoice
02:38 3 Key Differences

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