Difference between Pro forma Invoice and Commercial Invoice in Export Import Trade. Do pro-forma invoice accepts for import customs clearance?

 

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Difference between ‘Pro forma Invoice’ and ‘Commercial Invoice’ in Export Import Trade

saleOne of the common questions arises in a business terms is the ‘difference between pro forma invoice and invoice’. ‘What is pro forma invoice’, ‘What is commercial invoice’ and ‘what is the difference between commercial invoice and pro forma invoice’.

Let us discuss – ‘when the pro-forma invoice is issued’ and ‘when invoice is issued’.

Once after agreeing the terms of contract of sale, the buyer has to issue a purchase order or Letter of Credit. Just before this process, the seller has to send a ‘pro-forma invoice’ to buyer, mentioning complete details of agreement of sale. Normally, purchase order or Letter of credit is opened on the basis of this pro-forma invoice sent by the seller.

So, we can treat pro-forma invoice as a document of commitment to sell the goods to the buyer as per the terms and conditions agreed between both in person, over telephone, by fax, email or any other mode of communication. In other words, we can treat the pro-forma invoice as a ‘confirmed purchase order’ from the seller, although the official purchase order has to be issued by the buyer. The pro-forma invoice is issued before sales takes place.

Once after receiving pro-forma invoice from the supplier, the buyer sends a  purchase order or opens a letter of credit to the supplier. As per agreed date of shipment, the seller arrange to ship the goods. The seller issues commercial invoice at this point of time. Invoice is a prime document of sale in any business. We can call as commercial invoice. Invoice and commercial invoiceDifference between Pro forma Invoice and Commercial Invoice in Export Import Trade 3 is same. Commercial invoice is used to record ‘accounts receivable’ for the seller and accounts payable for the buyer. The content of commercial invoice is almost same as pro-forma invoice. However, the final sale price may vary with the pro-forma invoice, as pro-forma invoice is issued prior to actual sale takes place.

However, in some countries, pro-forma invoice is accepted in lieu of commercial invoice. to process import customs procedures to release cargo out of country.  You can also read  Difference between Purchase Order and Pro forma Invoice  and Difference between Purchase Order and Commercial Invoice

Do pro-forma invoice accepts in your country for import customs clearance? Comment below.

 

 

In this article, I have explained about Commercial Invoice and Proforma Invoice in Exports and Imports.  Would you like to add more information about Commercial Invoice and Proforma Invoice? Share your experience below  about Proforma Invoice and Commercial Invoice. 


Discuss below about Proforma invoice and Commercial Invoice.


 

The above information is a part of Guide on howtoexport and import 


 

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Comments


Mohit Ramle: The matter is really informative & enlightening. The writer has made the difference between Pro forma & Commercial nvoices easy to understand.

KKST: Thank you for the clarification. We used to mix up those two.

Ahmad: I would like to thank the writer for this information.

Sisay: I like the clarification !!

Mamata Tiwari: thanks for clarification

salem alem: hi am salem......i so clear with the information i gathered...thanks a lot

Moon: Thank you!

Aziz : Thank you so much,I had doubt. now Igot it Thanx again for clarification.

Irshad: Its really informative and detailed guidelines very easy to understand,Thanks to writer.

zia uz zaman: this site is very informative and helpful for aspirant of export import business..........

MK: For the last 3 years, I did not have clear understanding of proforma invoice vs. commercial invoice. Thank you for providing solution to a question unanswered on my own for the longest time!

Souvik: Hi...this is souvik. I want to know whether commercial invoice is must before issuance of.billl of leading?

Ganesh Raje: Thanku so much i m lucky to understand indeep this knowledge

Larry: I'm a first time poster. A friend of mine asked me to look into importing and exporting goods to and from his native Vietnam. So I've been investigating into becoming an import/export broker and he would be the buyer or seller. A basic question I have is: who actually creates the documentation betw. buyer and seller? For example, the proforma invoice, does the seller create it and send it to the buyer or does the broker create it and then talk to the seller and then send it to buyer? Sorry if this post is too long.

Dipesh Padole: well clarified

B.L.RAVI: Thanks for explaining this in very simple and lucid manner.

Machhindra waghachaure: This is verry good tools to circulate imp information how to follow legal procedure in business.thanks lot..

Suna Raman: It is very helpful thank you

Aathif: very helpful site for beginners.. good job admin!

Surendran Kollerath: Bill of Lading is issued on the basis of proof of completion of export customs clearance procedures. Commercial Invoice is issued when actual sales takes place.

sameer shaikh: Dear sir,What meaning of TT my company's major order for export from India to us but party's payment terms of TT pro farma invoice 85% and after bl copy 15% payment sir please guid me this dealing is my first dealing i have no any idea for import and export please guide me details Thanks, Regarding, Sameer Shaikh India

Dorothy: Thank you for that information very educating

Daniel: Thank u so much on this information it has help me alot

Fazil Ahamed: I really glad to know about the Commercial Invoice and Pro forma Invoice. Hope You posted here nice words but powerful instead of bored words. Any way keep do yur good job similar one this......

Sam: Thanks for explaining these terms so nicely.

MUNAF VHORA: DEAR SIR,I WANT TO START IMPORT YARN FROM DIFFRANT COUNTRY.I ALSO WANT TO IMPORT TEXTILE MACHINERY FROM CHINA OR KORIA.WILL PLEASE EDUCATE ME ABOUT TUFS AND EPCG.HOW CAN I TAKE BENIFIT UNDER TUFS & EPCG.THANKS &RIGARDS.

AAK Sundaram: Thank you sir.It is very informative.

wusa: one of the best websites on trade operations and LC's

Vincent Micallef: Distinction clearly explained. Perhaps the hereunder extract from the HM Revenue & Customs (view website) may be of interest to your readers. Pro-forma invoices If you need to issue a sales document for goods or services you haven't supplied yet, you can issue a 'pro-forma' invoice or a similar document to offer goods or services to customers. A pro-forma invoice is not a VAT invoice, and you should clearly mark them with the words 'This is not a VAT invoice'. If your potential customer accepts the goods or services you're offering them and if you actually supply them, then you'll need to issue a VAT invoice within the appropriate time limit - see the section in this guide on time limits for issuing invoices. If you've been issued with a pro-forma invoice by your supplier, you can't use that to claim back VAT on the purchase. You must obtain a VAT invoice from your supplier.

Do Thi Trang: Thanks for your clarification. In our country - Vietnam, Customs do not accept to use Pro forma Invoice for import customs clearance.

Admin: Hi Do Thi Trang, Thanks for your update on this subject. Keep updating procedures and formalities in your country. Thanks for your support

opu: Thanks writer

Kai Espinola: pro-forma invoice is not acceptable for customs clearance in the Philippines.

Arif Sardar Khari: Clarification between commercial invoice and pro forma invoice by the writer will always support us in making up shipping documents in a right way now. Thank you very much.

Vincent Micallef : If you need to issue a sales document for goods or services you haven't supplied yet, you can issue a 'pro-forma' invoice or a similar document to offer goods or services to customers.A pro-forma invoice is not a VAT invoice, and you should clearly mark them with the words 'This is not a VAT invoice'.If your potential customer accepts the goods or services you're offering them and if you actually supply them, then you'll need to issue a VAT invoice within the appropriate time limit.If you've been issued with a pro-forma invoice by your supplier, you can't use that to claim back VAT on the purchase. You must obtain a VAT invoice from your supplier."

Bharat: Dear Sir Will you please clarify one query? I want to export XYZ material as merchant traders from Manufacturer. And I create Export Invoice in advance for S/B generating. In this case Export Invoice date will be first to Commercial Invoice of Manufacturer at the time of dispatch goods to relevant Port. So in this case Sale Tax department can raise any query for the same.

Yashita exports: Thanks for explaining this in very simple way... very thankfull to you sir

Jayanti Rohit: is is accptable that comerrcial invoice date is post dated than bill of lading date

Admin: Jayanti Rohit, Shipment is effected after sales, hence commercial invoice date should be prior to shipment date (Bill of Lading date)

Bijal : Clarified my doubts....Well done writer.

Ariana: I often ship documents overseas to other company offices, so there is no purchase and no money exchanged. Which should I use?

Balachandra R: Explained in simple words, Thank you for your help !!!!

JHUNE: In my work we are directly using the COMMERCIAL INVOICE instead of Pro Forma Invoice, Commercial Invoice is easier than to do the Pro Forma Invoice, but it will still depends on your company how they handle the export documentation.

KK: Can commercial invoice be issued before manufacturing of food products that is to be exported?

Vanessa: What's a details information of subject topic and thanks for the explanation. It's very useful!!!

adeel Abbas: I am buy a phone from u.s.a. can you tell me plz when I show import license so what is next process. And what is minimum import license fees .

RISHABH KUMAR: VERY NICE EXPLAIN DETAILS FOR PROCESS OF EXPORT DOC.

IMRAN KHAN: VERY NICE EXPLINATION.PLEASE MENTION ABOUT TYPES OF INVOICES LIKE STUFF INVOICE AND TAX INVOICE

Manikandan: Hello sir My shipment of lying is custom for past 20days. We have not under invoiced or we didn't apply any special notification for clearance of goods. more over we have received the goods from my supplier on credit. We are clear and genuine. But custom detain the goods. saying they have doubt that we have under invoiced, we have made payment and not submitting payment swift copy. And now they say the goods not tallying in accordance with the quantity mentioned in invoice. But every time we import some goods go missing that also we don't know how. We don't know how to handle this issue. Please reply.

Vijayakumar K.: Thanks for the explanation and it is very helpful to differentiate.

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