8 Difference between Proforma Invoice and Invoice with Table

What is the difference between proforma invoice and invoice?

Proforma invoice and invoice are key documents used in business organizations. They are typically used to show financial records.

The article provides a significant difference between the proforma invoice and invoice in a tabular form to make understanding quite easier.

Difference between Proforma Invoice and Invoice

What Is a Proforma Invoice?

Proforma invoice refers to an invoice that provides information about certain goods yet to be delivered to the buyer or agent.

Some of the key descriptions on the proforma invoice are quantity, price, weight, type, and other specifications.

The seller uses the invoice to declare the specific date and price of the products and services to be delivered to the buyer.

What Is anĀ  Invoice?

Invoice refers to a commercial instrument delivered to the buyer containing the details of the products or services provided by the seller.

The document is mainly sent to the buyer requesting for the payment of goods delivered. It shows the amount the buyer is in debt to the seller. Here are some of the key features of an invoice:

  1. Unique number
  2. Date of issue of invoice
  3. The date on which the goods are delivered
  4. Details of the product
  5. Discount, if any, provided by the seller.
  6. Contact details of seller and buyer
  7. Payment terms, i.e. the date and mode.
  8. Terms of credit
  9. Total amount due for payment.

Comparison Chart: Proforma Invoice Vs Invoice

Basic TermsProforma InvoiceInvoice
MeaningIt is a quotation showing the details of goods yet to be delivered to the buyer by the sellerIt is a document sent to the buyer requesting payment for the goods or services delivered.
TypeQuotationBill
When Sent?Before the order is placedAfter delivery of goods
PurposeTo help the buyer make a decision on whether to make order or notHelp the buyer know the exact amount due to the seller
LegalityDo not have legal validityIt is a legal document
Entries in the Books of AccountNo entries are madeForm a basis of making entries
Buyer’s ResponsibilityBuyer not bound whoseverBuyer bound to make payment
AcceptanceCreation of saleConfirmation of sale

Core Differences between Proforma Invoice and Invoice

  1. A Proforma invoice is a quotation showing the particulars of products and services yet to be delivered whereas the invoice is a document sent to the buyer requesting payments for goods delivered.
  2. Proforma invoice is a type of quotation showing the commitment of the seller towards the supply of goods whereas the invoice is a type of bill displaying the amount due to the seller
  3. Proforma invoice is used for the creation of sale whereas invoice for the confirmation of sale
  4. Proforma invoice is created by the seller upon request by the buyer whereas the invoice is created by the seller to the buyer in a request for payment
  5. Proforma invoice is a dummy invoice hence not used in making entries whereas invoice serves the purpose of accounting entries
  6. The core function of the proforma invoice is to help the buyer make decisions whereas the invoice is meant to request payment from the buyer
  7. The invoice is a legal document unlike proforma invoice
  8. Proforma invoice is sent before the order is placed while the invoice is sent after delivery of the ordered products or services

Comparison Video

Summary

The core difference between a proforma invoice and an invoice is that the proforma invoice is a quotation showing particulars of goods yet to be delivered whereas the invoice is a bill showing the buyer the amount due after delivery of the products.

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