In the business world, different scenarios need to be dealt with different strategies. When settlers want the buyers to know about the estimated price of the products they sell, they are asked to prepare an invoice that does not tell the actual price but tells the estimated price of the products. This invoice is known as a proforma invoice.
For whom the proforma invoice was created?
The proforma invoice is created for those buyers who want to know the estimated price. It is a common behavior of buyers to know about the price in advance as the price is the major factor that has an impact on the buying decision of the buyer.
Sellers do not create the proforma invoice for every person who seems to be a potential buyer. Rather, they create it for committed buyers who have committed with the sellers to buy products from them.
Invoice Sample Size: 46 KB
In what way is the proforma invoice different from the standard invoice?
Although both of these documents are used for billing purposes, they have different meaning and utility. Unlike a standard invoice, they don’t always include the actual price of the item. Rather, they include the price which is the estimated price.
What is the right time to use the proforma invoice?
Sellers need to know when they should send this invoice to their buyers. The most appropriate time to send the preliminary bill to customers is before the actual shipment of the products. When customers come to know about the estimated price, he often changes the order or sometimes he also cancels it after paying the pre-decided penalty.
Why is it important to use the proforma bill?
Many people argue that there is no need to use the invoice because everything that has to be decided and discussed between two parties before the actual purchase should be done on the phone call as it is an advance time and there is no need to issue the invoice.
However, this is not true. An invoice is a hardcopy and sometimes it is also issued in the form of a softcopy because it outlines all the important details of the products that are likely to be sold. This document remains in the database of the computer and they are consulted whenever it is needed.
What information is provided in the proforma invoice?
This invoice includes some of the key elements that are often seen in other invoices. These elements include:
Information of the buyer and seller:
The invoice always mentions the name of the person who is buying a product and also the name of the person or the brand that sells it. If the seller is a brand, then the logo is also printed on the bill for quick and easy identification.
Description of products:
The information on the products that are being sold is included in the preliminary bill just like any other conventional bill. This usually includes the name of the product, its price, quantity, unit price, and some other specifications that are critical for a buyer to know about.
After reading these details, the buyer also confirms whether the seller is sending the products that he has ordered and whether their quantity and other specifications are accurate or not.
Details of shipping:
There are different modes of shipment and the price and time of the delivery vary for each mode of delivery. The seller should mention the mode he will choose to send products to the seller what discount the buyer can expect and under what conditions.
Price details:
This section informs the buyer about the total amount he should expect to pay to the seller if he chooses to complete the order. Along with the price, the total tax added to the price is also mentioned. If the product is being across the border, the duty tax is also stated in the invoice separately. All these taxes let the buyer know how the total price that he needs to pay makes sense.
If you are creating your invoice, you can add some other details specific to your business. For this, you can also download an editable template that is also helpful in drafting an invoice effortlessly.
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