What is the Difference Between Proforma Invoice and Commercial Invoice?
🆚 Go to Comparative Table 🆚The main difference between a proforma invoice and a commercial invoice lies in their purpose and timing. Here are the key distinctions between the two:
- Purpose: A proforma invoice is used as an estimate of the price for goods or services, serving as a quote for the potential buyer. It is often used in negotiations and to help the buyer obtain necessary import permits, overcome import restrictions, and arrange for a letter of credit or other payment methods. On the other hand, a commercial invoice is an official document issued after the goods have been delivered or services have been provided, representing the actual sale and demanding payment for the goods or services.
- Timing: Proforma invoices are issued before goods are shipped or services are provided, while commercial invoices are sent after the goods have been delivered or services have been completed.
- Legal Status: Commercial invoices are official documents with legal weight, used as proof of the transaction and required by customs authorities for import clearance. Proforma invoices, however, are not considered official documents and do not have legal standing.
- Information: Although both types of invoices may contain similar information, a commercial invoice typically includes more details, such as shipping dates, delivery times, and payment terms. A proforma invoice, in contrast, provides a general idea of the costs involved and may not contain as much specific information.
In summary, a proforma invoice is an estimate used for negotiation and planning purposes, while a commercial invoice is an official document used to record a completed transaction and demand payment for the goods or services provided.
Comparative Table: Proforma Invoice vs Commercial Invoice
Here is a table comparing the differences between a proforma invoice and a commercial invoice:
| Feature | Proforma Invoice | Commercial Invoice |
|---|---|---|
| Purpose | Estimate of the cost of goods or services | Request for payment for the actual cost of goods or services |
| Timing | Issued before the goods or services are provided | Issued after the goods or services are provided |
| Terms | Contains preliminary terms and conditions | Contains final terms and conditions |
| Legal Status | Not legally binding, used for informational purposes | Legally binding, used for financial record-keeping, tax purposes, and customs clearance |
| Accounting | Helps with budgeting but cannot be used for accounting services | Used for accounting services and tracking sales |
A proforma invoice is an estimate of the cost of goods or services and is typically issued before the goods or services are provided. It serves as a quotation or preliminary statement of the terms and conditions of the transaction. On the other hand, a commercial invoice is a legally binding document that provides proof of the goods and services and is used for financial record-keeping, tax purposes, and customs clearance.
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