Creating Proforma Invoices

Creating Proforma Invoices

Proforma invoices are preliminary bills sent to customers before the actual goods or services are delivered. They provide an estimate of the final invoice and are commonly used for international trade, advance payments, or when you need to provide pricing information before finalizing a transaction.

What is a Proforma Invoice?

A proforma invoice is a document that outlines the details of a sale, including items, quantities, prices, and terms, but it is not a legally binding document for payment. It serves as a commitment to sell goods or services at specified prices and terms, helping customers understand what they will receive and how much they will pay.

When to Use Proforma Invoices

Proforma invoices are useful in various scenarios:

• International Trade: Required for customs clearance and import/export documentation
• Advance Payments: When customers need to make partial or full payment before delivery
• Price Quotations: Providing detailed pricing information to potential customers
• Custom Orders: For made-to-order items that require upfront payment
• Documentation: For visa applications, import licenses, or other regulatory requirements

Step-by-Step Guide to Creating a Proforma Invoice

Step 1: Navigate to Sales Proforma

To create a new proforma invoice:

1. Go to the Sales module in the main menu
2. Click on "Sales Proforma" or "Proforma Invoice"
3. Click the "New Proforma" or "Create Proforma Invoice" button

Step 2: Select Customer

Choose the customer for whom you're creating the proforma invoice:

• Select an existing customer from the dropdown list
• Or create a new customer by clicking "Add New Customer"
• Customer details including billing and shipping addresses will automatically populate

Step 3: Enter Proforma Details

Fill in the basic proforma invoice information:

• Proforma Date: The date when the proforma invoice is created (defaults to today)
• Proforma Number: Auto-generated based on your numbering rules, or enter manually
• Reference Number: Optional reference number for your internal tracking
• Place of Supply: Select the location where goods/services will be supplied
• Currency: Select the currency for the proforma invoice (if multi-currency is enabled)
• Branch: Select the branch/location (if multi-branch is enabled)

Step 4: Add Items

Add products or services to your proforma invoice:

1. Click "Add Item" or select from the item list
2. Enter the item name, description, quantity, and unit price
3. Tax rates will be applied automatically based on item settings
4. Add discounts if applicable (percentage or fixed amount)
5. Add multiple items as needed
6. Specify HSN/SAC codes for tax compliance

Step 5: Configure Shipping Details

For international or shipping scenarios:

• Shipping Address: Enter or select the delivery address
• Shipping Method: Specify the shipping method (if applicable)
• Shipping Charges: Add shipping costs as an additional charge
• Delivery Terms: Specify delivery terms (FOB, CIF, EXW, etc.)

Step 6: Apply Additional Charges (Optional)

You can add additional charges such as:

• Shipping charges
• Packaging charges
• Insurance charges
• Customs duties (for international transactions)
• Any other applicable fees

Step 7: Review Totals

Check the proforma invoice summary:

• Subtotal (before tax)
• Tax amounts (CGST, SGST, IGST, etc.)
• Additional charges
• Discounts applied
• Grand total

Step 8: Add Terms and Conditions

Include important terms:

• Payment terms and conditions
• Delivery terms
• Validity period of the proforma invoice
• Special conditions or notes
• Export/import terms (for international trade)

Step 9: Save the Proforma Invoice

Once all details are entered:

• Click "Save" to save as draft
• Or click "Save & Send" to save and email to the customer
• The proforma invoice will be saved and can be converted to a regular invoice later

Proforma Invoice Features

• Item Management: Add multiple items with different quantities and prices
• Tax Calculation: Automatic tax calculation based on item and customer settings
• Discounts: Apply item-level or document-level discounts
• Templates: Use pre-configured proforma templates for consistent formatting
• Multi-currency: Create proforma invoices in different currencies if enabled
• Multi-branch: Create proforma invoices for different branches/locations
• Export Options: Print, email, or download as PDF

Best Practices

• Clearly mark the document as "Proforma Invoice" to avoid confusion
• Include all relevant details that will appear on the final invoice
• Set a validity period to ensure proforma invoices don't remain open indefinitely
• Include clear terms and conditions to avoid misunderstandings
• Review all calculations before sending to customers
• Use professional proforma templates that reflect your brand
• Keep track of proforma invoices and convert them to invoices when orders are confirmed
• For international trade, ensure compliance with export/import regulations

What's Next?

After creating a proforma invoice, you can:

• Send it to the customer via email
• Print or download as PDF
• Convert it to a regular Sales Invoice when the order is confirmed
• Track its status and follow up with the customer
• Use it for customs clearance or import documentation

Related Articles

Learn more about:

• Proforma vs Invoice
• Converting Proforma to Invoice
• Proforma Templates
• Creating a Sales Invoice