Frequently Asked Question

- What is a proforma invoice? Is it mandatory?
Last Updated 6 months ago

A proforma invoice is a preliminary bill or estimated invoice which is used to request payment from the commited buyer for goods or services before they are supplied.

It is essentially a "good faith" agreement between you the seller and a customer so the buyer knows what to expect ahead of time.

For example, if payment is required in advance to ensure financing is secured before the seller manufactures goods or supplies a service, a proforma can be used to propose the details of the upcoming transaction.

Proformas type receipt is not affecting liability and thus it serves only to justify events with a clear track record. Proformas are mostly used in hotels and restaurants for example, to record an event (order) that took place prior to final invoice. In these cases, there is a reference number passed down the chain. Countries like Samoa and Fiji are not making this mandatory, but for example in Washington State where restaurants are using the system, Department of Revenue makes it mandatory to print proforma when customers make the first order at the table, than another one for the main course, etc, than even at the time when customers plan to pay or split the bill, proformas are used to link those events so officers at DOR would have a clear audit trail of the events from customers entry until payment.

So, proformas don't have to be closed once issued, if there is no need for that. If issued as a quotation to a customer and customer pays the bill based on that, then NS should bear the PS# in document ref field, but it's not mandatory, it's just a good practice.

Please take into consideration that there may be some jurisdictions that can eventually make proforma invoices mandatory or they have them already as mandatory in their jurisdiction.

You can check the latest informations concerning the policies and regulations of each jurisdiction by contacting their respective legal departments.

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