Invoice vs Proforma Invoice: What’s the Difference?
An invoice and a proforma invoice may seem similar, but there are some key differences between them. Knowing the difference between an invoice and a proforma invoice can help you decide which one you need for your business.
Invoices are a type of payment request that are used by businesses to track and receive payment from customers. Invoices include details such as the customer’s name and address, the items or services purchased, the total amount due, and payment terms. Once an invoice is issued to a customer, the customer is obligated to pay the amount due by the specified due date.
A proforma invoice, on the other hand, is a document that is sent to customers before the sale of goods or services has been completed. It serves as an estimate of the total cost of the transaction and includes details such as the customer’s name and address, the items or services to be purchased, the estimated cost of the transaction, and payment terms. Unlike an invoice, a proforma invoice is not legally binding and the customer is not obligated to pay the amount due.
An invoice is usually issued after the customer has received the goods or services they purchased, while a proforma invoice is typically sent before the sale of goods or services has been completed. Invoices are binding and the customer is obligated to pay the amount due by the specified due date. Proforma invoices, on the other hand, are not binding and are used to inform the customer of the estimated cost of the transaction.
In conclusion, an invoice is a legally binding document that is issued after a customer has received the goods or services they purchased, while a proforma invoice is a non-binding document that is sent before the sale of goods or services has been completed. Knowing the difference between an invoice and a proforma invoice can help you decide which one you need for your business.
Frequently Asked Questions
1.What is the difference between an invoice and a proforma invoice?
Answer: An invoice is a request for payment for goods or services that have already been provided, while a proforma invoice is a document that is issued in advance of providing goods or services as an offer to a customer.
2. How can I create an invoice?
Answer: You can create an invoice using an invoicing software, an invoicing template, or an online invoicing service.
3. What information should be included in an invoice?
Answer: An invoice should include the name and contact information of the customer, the name and contact information of the seller, a description of the goods or services provided, the quantity and cost of each item, the total cost, the payment terms, and any applicable taxes.
4. What is the purpose of a proforma invoice?
Answer: The purpose of a proforma invoice is to provide an estimate of the cost of goods or services prior to the customer making a purchase, and to act as a contract between the buyer and seller.
5. Can I use an invoice to request payment?
Answer: Yes, an invoice is a request for payment for goods or services that have been provided.