A pro forma invoice is a preliminary invoice a seller issues before goods ship or services are delivered, setting out what will be sold, at what price and on what terms. It is an offer in invoice form rather than a demand for payment: the buyer uses it to approve the purchase or arrange payment, and the sale is recorded later, against the commercial invoice.
Why It Matters
The term carries two meanings, and confusing them causes problems at the border. In commercial practice it is the seller's advance invoice. In US customs regulations it is something else: the importer's own statement of value, in a form set out in 19 CFR 141.85, filed when no commercial invoice is available. CBP accepts an entry on that basis only under conditions, including a bond for producing the required invoice later (19 CFR 141.91). For trade-finance and accounts-payable teams, a pro forma in either sense is a supporting document, not evidence that a sale took place.
How It Works in Practice
- 1The seller prepares the pro forma with the parties, a description of the goods, quantities, prices, currency, delivery and payment terms, and how long the offer stands.
- 2The buyer uses it to approve the purchase internally and, where needed, to support a prepayment, a letter of credit application or an import permit.
- 3When the goods ship, the seller issues the commercial invoice; receivables, revenue and the buyer's payable follow that document, not the pro forma.
- 4If a US importer has no seller's or shipper's invoice at entry, the importer may file a pro forma invoice in the form of 19 CFR 141.85, stating the basis for the values declared, together with a written declaration that the required invoice cannot be produced (19 CFR 141.91).
Common Pitfalls
Booking a pro forma as a receivable or as revenue. It records an offer, not a completed sale.
Paying against a pro forma and never matching the payment to the commercial invoice that follows. A prepayment needs the same match as any other payable, or it sits unreconciled.
Treating a customs pro forma as a formality. Under 19 CFR 141.91 CBP accepts the entry only if it is satisfied the invoice could not be produced for a cause beyond the importer's control, and the importer files a bond for producing it.
Using the commercial meaning in a customs conversation, or the reverse. Ask which document is meant before preparing one.
Sources
- 19 CFR 141.85, Pro forma invoice — Electronic Code of Federal Regulations
- 19 CFR 141.83, Type of invoice required — Electronic Code of Federal Regulations
- 19 CFR 141.91, Entry without required invoice — Electronic Code of Federal Regulations
Related Terms
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