Proformas and commercial invoices: What’s the Difference?

Uninformed shippers can erroneously believe that proformas and commercial invoices are interchangeable, but they are not. Both documents are frequently used in export procedures. This post will compare and contrast the proforma and commercial invoice, two of the most typical export documents that exporters should be familiar with. We'll also examine the function that each form represents in an export shipment.

The Proforma Invoice

A proforma invoice is nothing more than a quotation that the exporter has created to look like a commercial invoice. A letter of inquiry from a prospective customer detailing their interest in one or more of your items, outlining the conditions of that interest, and requesting an informal or formal estimate is frequently the first step in an overseas transaction.

A proforma invoice should be valid for a particular amount of time. A reasonable amount of time should be provided for the buyer to reply before the proforma invoice expires because you typically quote not only the price of your product but also the cost of transportation.

The Commercial Invoice

The transaction is ready to go once the buyer and seller have reached an understanding over the terms of the sale and the buyer has agreed to the proforma invoice's terms (often by submitting a purchase order that the seller has accepted). The seller generates a commercial invoice when the merchandise is prepared for shipping.

The commercial invoice is crucial to the export procedure since it not only specifies the amount that the buyer owes the seller but also when and how to pay. The commercial invoice serves as the main shipping document used by customs offices around the world for the management and value of commodities and contains crucial instructions and data for:

• The freight forwarder
• National and foreign customs
• The importer part
• And other parties involved

The commercial invoice must therefore contain all the information required to properly complete the export shipment.
Obtain a free commercial invoice by clicking here.

Proformas and commercial invoices: 3 Important Differences

Even if a proforma invoice and a commercial invoice may appear to be very similar, there are three significant differences between these two forms:

1. When they are released
   A company will send out a proforma invoice as a quote if a prospective foreign customer contacts them with questions about one or more of their products. This quote will include information on the price and other terms of the transaction.
2. What they consist of
   Even though the content on both kinds of forms may be identical, the commercial invoice should reflect the whole, mutually agreed-upon terms of the transaction, including any additional export or import control information that may be required.
   The proforma invoice and commercial invoices are a part of the paperwork that includes the contract between the buyer and seller. 
3. How to use them
   The proforma invoice is used by the buyer and the seller to discuss the sale's price and other details, as was previously mentioned. In addition, the buyer may utilize it to set up a letter of credit or other payment method, get any required import licenses, and get over any potential import limitations.
   The commercial invoice serves as more than just a means of money collection. Customs authorities also utilize it to determine the proper import tariffs, taxes, and other fees as well as to verify that export regulations are being followed. Furthermore, it offers the details required to transfer the products from the seller to the buyer.
    

If the proforma is properly created, the difference between these two documents may be minor.
They are both essential to your exporting process, thanks to secom, you can prepare them quickly and easily, as well as the other required documents for exporting in accordance with international regulations.