What is the difference between a proforma invoice and a commercial invoice?
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In international trade and invoicing, different documents are necessary for different purposes. Two of the most commonly used invoice types are the commercial invoice and the pro forma invoice. This article will explore their definitions, key differences, and when they should be used.
Proforma invoice
Unlike a commercial invoice, a pro forma invoice is not a binding contract. Instead, it is a preliminary invoice that gives the buyer an idea of the expected costs of the upcoming transaction. It is often used before the actual delivery or formal conclusion of the contract and is intended to provide a preview of the transaction rather than to determine the final sales price.
Commercial invoice
A commercial invoice is an important document in international trade, formalizing the sales agreement between the seller and the buyer. It contains detailed information about the goods sold, including description, quantity, price, delivery and payment terms, and country of origin. For customs clearance The commercial invoice is necessary and is also used to determine the customs value of the goods.
Differences between proforma invoice and commercial invoice
- Binding vs. Non-binding: The commercial invoice is a binding agreement while the pro forma invoice is more like an estimate.
- Usage: The commercial invoice is used for customs clearance and payment, while the proforma invoice is used to provide a preliminary estimate or request advance payment.
- Validity: The pro forma invoice may have an expiration date, while the commercial invoice represents the final deal.
When to use proforma invoice and or commercial invoice
- The commercial invoice is used when the goods are ready for shipping and for customs purposes.
- The proforma invoice used to provide an estimate, request advance payment, or when all details of the commercial invoice are not available.
Understanding the differences between a commercial invoice and a pro forma invoice is crucial for the efficient handling of international transactions and ensuring accurate documentation. By using the right invoice type in the right context, businesses can avoid confusion and complications in the trade process.
