A pro forma invoice is designed to provide price quotation of the initial product, preceding the existent sale of that product. An individual should know what is a pro forma invoice which is an instrument used to provide additional information about the product to the potential buyer.
As the pro forma invoice is the first quotation price, it doesn’t come under a legal document. It is like confirmation of a purchase order. There are some reasons of why a buyer or seller may require a pro forma invoice usage.
This invoice recommended as a contact source between the seller and buyer. It is an essential source for the details such as the names and addresses of the buyer and seller. By using specific date on the invoice, the seller could amend the final invoice to indicate the new dynamics.
Complex business transactions may need the parties to use the pro forma invoice for the descriptions. If a country is buying goods from another country, there may be exchange rates and currency issues. Such type of issues would be explained clearly by using pro forma invoice. Others issues like freight or shipping expense can be listed in the pro forma invoice.
These invoices are used in the calculation of the anticipated expense for the customs responsibilities when the goods are crossing the boundaries. In the trade exchanges, always try to avoid surprises. This invoice always concentrates at addressing all the elements which may be involved in the obligations of a specific trade.
This invoice for all purposes and intents is not binding on the involved parties. However, the content may look similar to that of final commercial invoice, but it is not necessary to be same. It provides an opportunity for the seller to revise the expense calculations before issuing the final expense. Buyer is having the opportunity in reviewing the planned purchase, and may decline the acquisition altogether.
This invoice is a good document which supports the funding transaction applications. When a business transaction involves a meaningful cost, the customer may need to look for extra financing for the project.