Proforma Invoice: What It Is and When to Use

A proforma invoice is a preliminary bill you send a buyer before the sale is final, laying out the estimated goods or services, quantities, prices, and terms so both sides agree on the numbers first. Think of it as a formal preview of the real invoice. It looks like an invoice and reads like one, but it doesn't request payment or record a completed sale. You send it to confirm an order, ask for a deposit, or help a buyer clear customs, and then you follow up with a proper final invoice once the work is done. Here's when to use one, how it differs from a tax invoice, and what to put on it.

What Is a Proforma Invoice?

A proforma invoice is a good-faith estimate dressed up in invoice form. The word "proforma" means "as a matter of form," and that's exactly the point. It gives the buyer all the details they'd see on a final bill, your details, their details, an itemised list, and a total, but the figures aren't locked in and no payment is being demanded yet.

Why bother, when you could just send a quote? Because a proforma sits later in the process. A quotation is your opening offer to win the job. A proforma comes once the buyer has more or less decided to go ahead and you both want a firm, invoice-style document that spells out the agreed order before anything ships or any deposit changes hands. It removes surprises. Nobody likes a final bill that doesn't match what they thought they agreed to.

When Should You Use a Proforma Invoice?

Proforma invoices earn their keep whenever the exact cost or the timing needs pinning down before you commit. The most common situations are:

• Custom or made-to-order jobs. When the price depends on materials, labour, or specs that aren't final, a proforma confirms the estimate before you start.
• Advance payments and deposits. Many businesses send a proforma to request a deposit before beginning work, without it counting as a formal sale yet.
• International shipping. Many customs authorities accept a proforma invoice to assess duties and taxes before the goods arrive. But this one has a big exception if you're shipping through Singapore, covered right below.
• Buyer approvals and financing. A buyer's finance team may need a proforma to approve a purchase order, arrange a loan, or open a letter of credit.

In each case the proforma does the same job: it puts the numbers in writing so both sides can plan, without triggering payment obligations or tax records. If you mostly send early-stage offers instead, our quotation guide covers that side.

How Is It Different From a Commercial or Tax Invoice?

This is where people get caught out, and it matters for tax. A proforma invoice is not a commercial invoice and not a tax invoice. The difference is legal standing. A commercial or tax invoice is the real thing: it records a completed sale, requests payment, and goes in your books. A proforma does none of that.

The tax point is the big one. In Singapore, the Inland Revenue Authority of Singapore (IRAS) requires a proper tax invoice before a GST-registered customer can claim the GST back as input tax, and a proforma doesn't qualify. The UK is more explicit about it. HMRC's VAT Trader Records manual states flatly that "pro-forma or similar invoices are not, therefore, acceptable evidence" for reclaiming input tax, because section 25 of the VAT Act 1994 requires a valid VAT invoice. HMRC also advises that a proforma "should preferably be endorsed 'This is not a VAT invoice'", and that in normal circumstances it isn't an accounting document at all, with no place in the books of either party. And once you've been paid or delivered, HMRC gives you 30 days to issue the full VAT invoice. So if your customer needs to reclaim tax, a proforma won't cut it. You have to issue the final invoice.

For the full field requirements on a real tax invoice, see our GST invoice guide, and for the plainer difference between billing documents, our invoice vs receipt guide.

What Should a Proforma Invoice Include?

A proforma should carry almost everything a normal invoice does, so the buyer sees the real picture. Include:

• The words "Proforma Invoice" clearly at the top, so it can't be mistaken for a final bill.
• Your business name, address, and contact details, plus the buyer's.
• A date, and a validity period, since prices can change.
• An itemised list of goods or services with quantities and unit prices.
• The estimated subtotal, any taxes shown as an estimate, and the total.
• Proposed payment terms and delivery details.

The one thing to hold back is anything that makes it look official for tax. Don't present it as a "tax invoice," and if you show tax, label it as an estimate. Our invoice checklist lists the fields a final invoice needs once you get there.

Should Your Proforma State an Incoterm?

If the goods cross a border, yes. Leaving it off is probably the most expensive omission you can make on this document, because without it your total is ambiguous about who pays for freight, insurance and duties. And the buyer will read it the way that costs them least.

Incoterms are published by the International Chamber of Commerce, and the current edition is Incoterms 2020. There are 11 rules. Seven work for any mode of transport, which are EXW, FCA, CPT, CIP, DAP, DPU and DDP, and four are for sea and inland waterway only, which are FAS, FOB, CFR and CIF. The ICC describes their job as allocating cost, risk and obligations clearly enough to prevent costly disputes.

Here's why that belongs on a proforma specifically rather than being left to the contract. The US International Trade Administration lists choosing your Incoterm as one of the three things you need in order to price a product properly and give an accurate quotation. A proforma is a quotation. A total with no delivery term attached isn't really a total.

Four you'll meet constantly, and what each does to the number on the page:

• EXW. The buyer collects from your premises and takes on nearly everything after that. Lowest figure on the proforma, most work for them.
• FOB. You cover costs and risk until the cargo is loaded on board. The buyer carries it from there.
• CIF. You cover freight and insurance through to the destination port.
• DDP. You deliver to the buyer's door with import duties and taxes paid. Highest figure, and the most risk sitting with you.

Same goods, four very different totals. The three letters aren't a logistics footnote, they're part of the price.

One mistake is worth calling out because it's everywhere. FOB gets used for containerised shipments constantly, and per the ICC's own split above, FOB sits in the sea and inland waterway group. Containers are handed to a carrier at a terminal rather than loaded on board by the seller, so FCA, CPT or CIP are the terms actually built for that. Using FOB anyway leaves the seller carrying risk over a stretch they don't control.

Insurance deserves its own line too. Only CIF and CIP oblige the seller to insure. Under every other rule it's optional and falls to whoever carries the risk on that leg, which means neither side should assume cover exists. Saying so on the proforma costs one sentence and settles an argument you'd otherwise have after something gets damaged.

Write it as the term, the named place, and the edition. Something like "CIF Rotterdam (Incoterms 2020)". A bare "CIF" with no place attached is incomplete, and the edition matters because the rules changed between versions. Add that line to the delivery details in the checklist above, and our guide to what to include on an invoice covers how the same information should carry through to the commercial invoice that follows.

Is a Proforma Invoice Legally Binding?

Generally, no. A proforma invoice is a declaration of intent, not a binding contract, and the buyer isn't obliged to pay it. That's the whole reason it exists, to share firm numbers without locking either side in before the deal is done. The amounts can still shift if the scope changes.

There's one wrinkle worth knowing, and it catches people out. Issuing a proforma creates no tax point at all, which is the whole point of it. But under UK VAT rules, the moment a customer actually pays against that proforma, the payment itself creates a tax point, even though you haven't issued the final invoice yet. Tax becomes due on the amount received. So a proforma is safe as an estimate, but the moment money moves, your obligations start and a proper VAT invoice has to follow. Issue it promptly rather than waiting for delivery.

What Happens to Your Proforma Inside a Letter of Credit?

It stops being a draft and turns into the blueprint for a payment instrument you can't easily change afterwards. Two sections above mention in passing that a buyer may use your proforma to open a letter of credit. Here's what actually happens next, because this is where exporters lose money on paperwork rather than on goods.

The chain runs like this. You send a proforma. Your buyer hands it to their bank. The bank issues a credit built largely from the terms on that document. You ship, then present your documents. The bank pays only if those documents comply.

The credit forgets your contract

This is the part that surprises people, and it's the whole reason the proforma matters so much. The ICC Academy spells out the principle of autonomy: "a documentary credit has its own terms and conditions which do not rely upon the terms or performance of the sales contract."

Once the credit exists, it is its own animal. It does not care what you and your buyer agreed over email. It does not care whether you shipped exactly the right goods on time. It cares about documents.

Those documents are governed, as the ICC puts it, by "an international code of practice drawn up by the International Chamber of Commerce, known as Uniform Customs and Practice for Documentary Credits (UCP)." A complying presentation is defined as "a presentation that is in accordance with the terms and conditions of the credit, the applicable provisions of UCP 600 and international standard banking practice."

US law puts it even more bluntly. Under UCC section 5-108(a), an issuer must honour a presentation that "appears on its face strictly to comply" with the terms of the credit. Strictly. Not broadly, not in spirit.

The clocks are short, and one of them protects you

Two deadlines are worth carrying in your head. Under UCP 600, sub-article 14(b) "limits the examination period to a maximum of five banking days following the day of presentation." Under UCC 5-108(b), a US issuer gets "a reasonable time after presentation, but not beyond the end of the seventh business day of the issuer after the day of its receipt of documents."

And there's a rule that runs in your favour, which exporters rarely know about. Section 5-108(c) says an issuer "is precluded from asserting as a basis for dishonor any discrepancy if timely notice is not given, or any discrepancy not stated in the notice if timely notice is given."

So the bank has to list its objections, in time, or it loses them. It cannot reject you on day nine, and it cannot find a fresh reason later that it left off the original notice. Fraud, forgery and expiry sit outside that protection under 5-108(d), but for ordinary paperwork disputes it's a real safeguard.

Write the proforma like it's the credit

Because in practice it very nearly is. Every field you type may be copied into the credit and then held against your shipping documents.

• Goods description. Whatever you write here will likely need to match your commercial invoice word for word. Resist the urge to be poetic or over-specific. Fewer details are fewer things that can fail to match.
• Quantity and tolerance. If you might ship slightly over or under, say so now. Agreeing a tolerance afterwards means amending the credit.
• Incoterm. The Incoterms section above matters twice as much here, because the rule you pick determines which documents you're obliged to produce.
• Currency. It has to match exactly, which makes the foreign currency section above worth rereading before you send.
• Partial shipment and transhipment. Decide before the credit is issued, not when your freight forwarder splits a container.
• Shipment and expiry dates. Build in slack. Ports are late for reasons that have nothing to do with you.
• Your legal name and address. Exactly as it will appear on every other document in the set.

The habit that saves the most trouble is simple: ask your buyer to send you the draft credit terms before their bank issues it. Reviewing a draft is free. Amending an issued credit costs fees, takes days, and needs agreement from everyone involved.

Most proformas, of course, never go anywhere near a letter of credit. If you're sending one to a client across town, none of this applies to you. But the moment a buyer mentions opening a credit, the document you're about to write becomes the most consequential one in the whole transaction.

When Does a Proforma Trigger GST in Singapore?

The section above gave you the UK version of this trap. Here's the Singapore one, because it works the same way and catches far more people locally.

IRAS sets the time of supply, the moment GST becomes due, as the earlier of two events: when you receive payment, or when you issue an invoice. Not when the goods ship. Not when the job finishes. Whichever of those two comes first.

Run a proforma through that rule and you get two clean answers.

Sending the proforma triggers nothing. It isn't a bill for payment, so it doesn't count as issuing an invoice, and no money has moved. You're free to send as many as you like.

Getting paid against it triggers everything. The moment that deposit lands, you've hit the payment leg of the test and GST is due on the amount received, even though you haven't raised a real invoice yet. This is the one that bites. A common pattern is to send a proforma, collect 50 percent up front, do the work over six weeks, then invoice at the end. If those six weeks straddle a GST quarter, the deposit belonged in the earlier return and the final invoice date is irrelevant to it.

There's a second edge worth knowing about, and it's about wording rather than timing. IRAS treats any document that serves as a bill for payment from a GST-registered supplier as an invoice for this purpose, not only something formally titled "tax invoice." So a proforma that reads like a demand, with a payment due date, bank details, and no indication it's an estimate, is arguing against itself. Two habits keep you clear: label it "Proforma Invoice" at the top as this guide already recommends, and give it a validity date rather than a due date. A validity date says the price expires. A due date says pay me by then.

None of this makes proformas risky. It just means the tax clock runs off the money, not off the paperwork. If you take deposits and you're GST-registered, diary the payment date, not the invoice date, and raise the final invoice promptly. Our GST invoice guide covers what that final document has to carry, and our payment terms guide covers how to structure deposits in the first place.

What If Your Proforma Is in a Foreign Currency?

The proforma can be in whatever currency you like. The final tax invoice can't, not entirely, and that catches people out because proformas get used for exactly the cross-border jobs where you're quoting in US dollars.

If you're GST-registered in Singapore and you issue a tax invoice in a foreign currency, IRAS requires you to convert it into Singapore dollars using an approved exchange rate. Its guidance on foreign currency transactions, with the detail set out in its e-Tax Guide on exchange rates for GST purposes, sets three rules worth knowing before you send anything:

• The rate has to come from an approved source. Rates published by local banks or locally circulated newspapers are the standard examples.
• It has to be reasonably current. The rate you use is expected to be updated at least once every three months, so a figure you saved last year won't do.
• You have to stick with your source. Once you pick one, you're expected to use it consistently across your accounting and GST reporting, for at least a year from the end of the accounting period you first used it in. You can't shop around for a friendlier rate each quarter.

The Singapore dollar amounts can sit right beside the foreign currency ones on the same invoice, so this isn't about issuing two documents. And what you report in your GST return is the Singapore dollar figure from that invoice, not a number you recalculate later.

The specifics above are Singapore's, but the shape of the rule travels. Most VAT and GST systems let you quote a proforma in any currency and then require the final tax invoice to show the local-currency figure, converted at an official or otherwise approved rate from a source you stick with. The published rate and the approved sources differ by country, so check your own tax authority before you set a policy. What rarely differs is the expectation that you pick one source and use it consistently.

Now put that next to the tax point rule from the section above, because the two combine into the actual trap. You send a proforma in US dollars. A deposit lands three weeks later, which is the moment GST becomes due on that amount. The job runs another two months, and by the time you raise the final invoice the rate has moved. The proforma figure was never the tax figure. It was an estimate, and the estimate doesn't govern anything.

Two separate exposures sit inside that, and it's worth keeping them apart. One is ordinary FX risk on your margin, which is a commercial problem you solve with pricing. The other is getting the Singapore dollar conversion right for GST, which is a compliance problem you solve with a consistent rate source and good records. Confusing the two is how people end up either overthinking the pricing or underthinking the paperwork.

Three habits keep it clean. Name the currency explicitly on the proforma rather than leaving a bare dollar sign, since "$" means something different in four of the markets your buyer might be in. Use the validity date this guide already recommends, which doubles as your FX cover because it caps how long you're honouring a price. And say in writing who carries the currency risk if the rate moves between the proforma and the final invoice, so it's settled before it costs anyone anything.

One thing this doesn't touch. Customs valuation runs on its own rules, so the Cost, Insurance and Freight basis Singapore Customs expects on your commercial invoice is a separate calculation from the GST conversion here. Don't assume one number serves both.

Does Singapore's InvoiceNow Rollout Change Anything?

For your proforma, no. For what comes after it, quite a lot, and it's worth knowing which is which.

IRAS is phasing in a GST InvoiceNow requirement, under which GST-registered businesses send invoice data to IRAS through the InvoiceNow network rather than only keeping their own records. It began with newly incorporated companies applying for voluntary GST registration and is being extended in stages. At Committee of Supply 2026, IRAS announced the extension to all GST-registered businesses by April 2031, rolled out progressively from April 2028. The phase that applies to you depends on your registration type and your annual supplies, so check the IRAS page for your own date rather than assuming.

Here's the part that matters for this guide. What gets transmitted is tax data, and a proforma isn't tax data. It records no supply, creates no tax point on its own, and belongs in neither party's books, so it sits outside that pipeline entirely. You can keep sending proformas exactly as before.

But it does raise the stakes on the handover. The final invoice is the document that gets transmitted, so the discipline this guide keeps repeating, that a proforma is a preview and a real invoice must follow, stops being just good bookkeeping and becomes part of a reporting obligation. If your habit is to send a proforma, take the money, and get round to the real invoice later, that habit is worth fixing before your phase arrives.

One practical note if you're not GST-registered at all: none of this applies to you yet. Registration thresholds are what pull you in, and our GST invoice guide covers where those sit.

What About Malaysia's e-Invoice Mandate?

Same answer, and for a reason you can verify yourself in about a minute.

Malaysia's e-Invoice system, run by LHDN through the MyInvois portal, is further along than Singapore's and it's a mandate rather than a gradual invitation. If you do any business in Malaysia you've almost certainly had the emails about it.

But a proforma never enters that pipeline. LHDN's own MyInvois developer documentation lists exactly which documents the system accepts, and there are eight: invoice, credit note, debit note, and refund note, plus a self-billed version of each. A proforma invoice isn't among them. The logic is the same as Singapore's: every one of those eight either records an actual supply or adjusts one that already happened, and a proforma does neither. It describes a sale that hasn't occurred yet.

Two things follow from that.

You can keep sending proformas in Malaysia exactly as you always have. There's no submission, no validation step, no QR code, nothing to file.

And the handover matters more here, not less. The moment the supply actually happens, the invoice you raise is a reportable document that has to be submitted and validated, not just emailed to your customer. So the habit this guide keeps returning to, proforma first and a real invoice always following, isn't only tidy bookkeeping in Malaysia. It's the difference between a transaction that's on the record and one that isn't.

Which phase applies to you depends on your annual turnover, and those thresholds have been revised more than once, so check LHDN's current guidance for your own date rather than trusting a number from any article, including this one. Our credit note guide goes deeper on the LHDN side, including what to do when a validated invoice needs correcting later.

Does a Proforma Work for VAT in the EU?

No, and the reason is structural rather than a matter of preference. If you're selling into Europe, this is the one that catches people out, because your buyer will happily accept the proforma and then come back weeks later asking for something else entirely.

The European Commission sets out what a VAT invoice has to contain, with the legal basis in the VAT Directive 2006/112/EC. Per its guidance on invoicing rules, a full invoice needs the date of issue, a unique sequential number, the names and addresses of both supplier and customer, the customer's VAT identification number where they're liable for the tax, a description with unit prices, the VAT rate and amount, and the date of the transaction.

Read that list against a proforma and the problem jumps out. A proforma isn't sequentially numbered in your invoice run, precisely because it isn't a real invoice yet, and it's issued before the supply rather than for one. Those aren't cosmetic gaps. The Commission is explicit that this information exists to serve as proof enabling VAT deduction, so a document missing it can't do that job.

What that means in practice is simple. Your customer in Rotterdam or Milan cannot reclaim input VAT against a proforma. They can use it to raise a purchase order, get internal sign-off, arrange a prepayment or open a letter of credit, all of which are genuinely useful. But their finance team will need a proper VAT invoice before the tax comes back to them, and if you don't send one, you have an unhappy customer and a chase you didn't budget for.

Two things worth knowing alongside that. There's a lighter option for smaller transactions, since the Commission also describes a simplified invoice needing only the date of issue, the supplier's VAT identification number, the type of goods or services, and the VAT amount payable. And the general obligation is broad: an invoice is required for VAT purposes for most business-to-business supplies, with exemptions mainly around financial and insurance services. For a plain-language version of your own obligations, the EU's Your Europe portal on charging and deducting VAT is the readable entry point.

One practical habit fixes almost all of this. When you send a proforma to an EU buyer, say in the covering email that a VAT invoice will follow on despatch or on payment. It takes one line, it sets the expectation before their accounts team forms a different one, and it saves the awkward exchange where they think they've been invoiced and you think you've been paid.

Do You Need an HS Code on a Proforma?

If the goods are crossing a border, yes, and leaving it off is the most common reason a proforma fails at the one job the buyer wanted it for.

Here's why it matters. Your buyer usually isn't asking for a proforma because they enjoy paperwork. They're asking so they can work out what the shipment will cost them landed, apply for an import licence, or get financing approved. All three of those run on the duty rate, and the duty rate comes from the classification code, not from your description of the product. "Cotton t-shirts" isn't something a customs tariff can price. A code is.

That code is the Harmonised System, run by the World Customs Organization. Per the WCO's own overview, it covers more than 5,000 commodity groups under a six digit code, it's used by more than 200 countries and economies, and over 98 percent of merchandise in international trade is classified with it. The WCO amends it every five to six years, which matters more than it sounds: a code you copied from an old invoice can quietly stop being the right one.

The six digits are the part that travels. Every HS country reads them the same way, which is what makes the code useful on a document going to a buyer you've never dealt with. Countries then add their own digits underneath for their national tariff.

In this region that extra layer is worth knowing about. Singapore Customs explains that the ASEAN Harmonised Tariff Nomenclature is an 8 digit nomenclature used by all ASEAN member states, built on the WCO's 6 digit HS. So a proforma going to a buyer in Malaysia, Thailand, or Indonesia can carry 8 digits and be read properly at the far end, while one going further afield should at least carry the universal 6.

Two practical rules. Put the code on the line item, next to the description, rather than burying it in a footnote, because that's where a freight forwarder looks. And classify honestly. A code that understates duty is the importer's problem when it's corrected, and it's your name on the document that started it.

One boundary worth stating plainly. A code on a proforma is an indication, not a declaration. Nobody clears goods on it. It's there so your buyer can estimate properly before the real invoice exists, which is the whole purpose of the document.

Does the Customs Answer Change From Country to Country?

Yes, and quite sharply. Singapore Customs tells you not to use a proforma for a permit application, so if you stopped reading after that section you might assume proformas are useless at borders generally. They are not. Other customs regimes accept them, just with conditions attached, and the United States sets out the clearest example of what those conditions look like.

US law provides for it directly. The pro forma invoice has its own section in the customs regulations, and a companion section covers what happens when the real invoice is not ready yet. The rules are in 19 CFR 141.91, hosted by Cornell Law School's Legal Information Institute.

Three things in that regulation are worth knowing before you assume a proforma will get your shipment through.

• It is a fallback, not a choice. The provision covers entry when the required invoice is not available in proper form at the time the entry documentation is filed. It exists because paperwork sometimes genuinely is not ready. It is not an invitation to skip the commercial invoice.
• You post a bond, and it is not small. The importer files a bond on Customs Form 301 in an amount equal to one and one-half times the invoice value of the goods, securing production of the real invoice. So the proforma does not remove the obligation. It converts it into a financial guarantee that you will meet it.
• There is a clock. The required invoice has to be produced within 120 days of the entry summary filing date. Where the invoice is needed for statistical purposes the window is much tighter at 50 days, extendable only if the Center director grants it for good cause.

There is a further wrinkle for anything shipped in instalments. Where the required invoice was not filed with the first entry, a pro forma has to be filed with each subsequent entry made before the real invoice appears, with a bond given or a charge made against a continuous bond each time.

And there's a second US section worth knowing, because it's the one that actually defines the document. 19 CFR 141.85 is titled simply "Pro forma invoice," and it prescribes what one has to contain: the shipper, seller, consignee and purchaser, whether the goods were bought or only agreed to be bought, the basis you used for the price, case marks and quantities and descriptions, unit and total prices, which charges are in or out, and the country of origin.

Two lines in it are worth reading before you sign anything. The importer declares that "the prices, or in the case of consigned goods the values, given below are true and correct to the best of my knowledge and belief." And then commits that "if any other invoice is received, I will immediately file it with an authorized CBP official."

That second line is the one people miss. You can't quietly keep a better invoice in a drawer. Once a different one exists, you're obliged to hand it over, which is a useful reminder that a proforma in a customs context is a sworn stopgap rather than a softer alternative to the real thing.

Put the two regimes side by side and the practical lesson is clear enough:

• Singapore: do not use a proforma for the permit. Raise the commercial invoice first.
• United States: a proforma is accepted as a stopgap, backed by a bond at 150 percent of value, with the real invoice owed inside 120 days.
• Everywhere else: assume neither answer applies until you have checked. Customs treatment of proformas is set nationally, and the two examples above are far enough apart to show how wide the range is.

The underlying point survives all three. A proforma describes an intended transaction. Every customs authority eventually wants the document that records the actual one, and the differences between countries are mostly about how long they will wait and what they want from you in the meantime. If your buyer is asking for a proforma to open financing rather than to clear goods, that is a different job and the earlier section on approvals covers it.

How Do You Create a Proforma Invoice?

You don't need special software. The quickest route is to take a normal invoice, title it "Proforma Invoice," add a validity date, and mark any tax as an estimate. Getting this right also protects your cash flow, and the numbers show why that matters. According to the Intuit QuickBooks 2025 Small Business Late Payments Report, which surveyed 2,487 US small businesses with up to 100 employees in January 2025, 56 percent were owed money on unpaid invoices, averaging 17,500 US dollars each. Nearly half, 47 percent, had invoices running more than 30 days past due. Clear documents, sent early, get you paid faster.

Once the buyer confirms and you've delivered, convert the proforma into a proper final invoice with a real invoice number. Our invoice template guide walks through the layout.

How Should You Number a Proforma Invoice?

Give proformas their own number series, completely separate from your real invoice numbers. It sounds like a small bookkeeping preference. It isn't, and getting it wrong is one of the easier ways to hand an auditor an awkward question.

Here's why it matters. According to the European Commission's invoicing rules, a full VAT invoice has to carry a unique sequential number that identifies it. Most VAT and GST regimes work the same way, because that unbroken run is what lets a tax authority check you haven't quietly dropped a sale. And a proforma isn't part of that run. HMRC's position, covered further up this page, is that a proforma has no place in the books of either party at all.

So if you pull proforma numbers out of your live invoice sequence, you create one of two problems, and both look bad:

• Gaps. You issue PF number 0042 as a proforma, the buyer walks away, and now your invoice run jumps from 0041 to 0043. An auditor sees a missing invoice, not an abandoned quote. You get to explain it, possibly years later, possibly without remembering.
• Duplicates. Or you reuse 0042 for the real invoice when the deal closes, and now two different documents with different totals share a number. That's worse. One of them is in the buyer's records and one is in yours.

The fix takes about a minute:

• Use a distinct prefix. Something like PF-2026-014 or PRO-014. It runs on its own, independently of your invoice numbers, and nobody outside your business cares whether that series has gaps in it. That's precisely the point.
• When it converts, the final invoice takes the next real number. Not the proforma's. And it carries the date of supply, not the date you sent the proforma, because that date is what drives your tax point.
• Cross-reference, don't renumber. Put "Ref: PF-2026-014" in a reference line on the final invoice. The buyer can match the two documents, and your sequence stays clean.
• Keep proformas out of accounts receivable. A proforma is not money owed to you. Nobody has agreed to anything yet. If your ageing report is quietly counting proformas, your overdue total is fiction and you'll end up chasing people who never placed an order.

One trap worth naming, because accounting software causes it. If your tool has a dedicated proforma, estimate, or quote document type, use that one. Don't build a proforma as a draft invoice, because in a lot of packages a draft invoice reserves a number in the live sequence the moment you save it. You get the gap you were trying to avoid, and you get it without noticing.

What Are the Fraud Risks When You Send a Proforma?

Higher than for almost any other document you send, and it's worth two minutes before you email the next one. A proforma is the document that carries your bank details and asks for money before anything has shipped. That combination is exactly what invoice fraudsters are hunting for.

The Singapore Police Force issued an advisory on 20 May 2026 about business email compromise scams involving requests to update vendors' payment account details. Since 1 January 2026 alone, 66 cases had been reported with losses of at least 19 million dollars.

The method is simple, which is why it works. Fraudsters either compromise a vendor's email account or impersonate one closely enough to pass a glance, then tell the customer there have been changes to the vendor's bank account details. The customer pays the new account. Everyone finds out weeks later, when the real vendor chases a payment that never arrived.

Now think about why a proforma is the perfect vehicle for that. It goes out before any money has moved, so your customer has no earlier payment to compare the account number against. It's expected to contain bank details, so nothing looks odd. And the buyer is already braced to pay a deposit, so the request doesn't raise an eyebrow. A first-time customer paying you up front has no baseline at all. That's the gap the scam lives in.

Here's what to do, following the Police guidance and adapted to this specific document:

• Verify account changes through a different medium. The Police put this first: verify with the sender "through a different medium." If a supplier emails you about changed bank details, ring them on the number you already had, not one printed in that email.
• Check the sender domain properly. The advisory notes scammers use domains that "closely resemble legitimate ones but contain subtle differences." One swapped letter is the whole trick, and it survives a quick look.
• Put a line on your own proforma. Something like "our bank details never change by email; call us on the number on this document to confirm before paying." It costs you nothing and it hands your customer the defence.
• Brief whoever handles your payments. Treat any account-change request as suspicious by default rather than as an admin task, especially when it arrives with urgency attached.
• Lock down your own email. The advisory recommends two-factor authentication, strong passphrases, and DMARC. That last one makes your domain harder to spoof, which protects your customers from a fake proforma sent in your name.

Two reasons this is your problem and not just your customer's. A customer who pays a fraudster has not paid you, and the argument about who eats that loss is expensive whichever way it lands. And if the fake came from a lookalike of your domain, you're explaining it to every other client you invoice.

In Singapore, suspected cases go to ScamShield at scamshield.gov.sg or the helpline on 1799. The figures above are Singapore's, but the mechanism is not, so the same habits apply wherever you invoice from.

What Else Do People Ask?

What is a proforma invoice used for?

A proforma invoice is used to give a buyer a clear, itemised estimate of what a purchase will cost before the sale is finalised. It's common for custom orders, advance-payment jobs, and buyer approvals. It helps the buyer budget, arrange financing, or approve the order, but it isn't a demand for payment. Many customs authorities accept one for pre-arrival assessment, though Singapore Customs does not allow pro-forma invoices for permit applications.

Is a proforma invoice a demand for payment?

No. A proforma invoice is a good-faith estimate, not a request for payment and not a record of a completed sale. It doesn't go in your sales ledger, and the amounts can still change. Once the buyer agrees and the goods or services are supplied, you issue a proper final invoice, which is the document that actually requests payment.

Can you claim GST or VAT on a proforma invoice?

No. A proforma invoice is not a valid tax invoice, so a buyer can't use it to claim input tax. In Singapore, IRAS requires a proper tax invoice for a GST-registered customer to claim GST back. In the UK, HMRC states a proforma is not a VAT invoice and should be labelled as such. A final tax invoice must follow before any tax is reclaimed.

What's the difference between a proforma invoice and a quotation?

They overlap, but a quotation is an early offer to win the work, often flexible and negotiable, while a proforma invoice is a firmer, invoice-style document sent once the buyer has decided to proceed. A proforma looks almost identical to a final invoice and confirms the agreed details, whereas a quote is the opening proposal. Both come before the real invoice.

Do you still need to send a final invoice after a proforma?

Yes, always. The proforma is only a preview. Once the goods are shipped or the service is done, you must issue a final commercial or tax invoice with a unique invoice number. That final invoice is the one that records the sale in your accounts, requests payment, and lets a GST or VAT-registered customer reclaim tax. Skipping it leaves your books incomplete.

Sources: Inland Revenue Authority of Singapore (IRAS) on invoicing and GST, on the time of supply being the earlier of payment received or invoice issued, and on the GST InvoiceNow requirement and its phased extension to all GST-registered businesses by April 2031; Singapore Customs import procedures guidance, which lists using pro-forma invoices for permit application among the things not to do, and sets out CIF-based valuation and the five-year document retention rule; HMRC VAT Trader Records manual (VATREC9010 and VATREC9020) on pro-forma invoices and input tax evidence; Lembaga Hasil Dalam Negeri Malaysia (LHDN), MyInvois developer documentation on the eight accepted e-Invoice document types, none of which is a proforma; IRAS guidance on foreign currency transactions, and its e-Tax Guide on exchange rates for GST purposes, on converting foreign-currency tax invoices to Singapore dollars using an approved exchange rate, keeping that rate current, and using one source consistently; Intuit QuickBooks 2025 Small Business Late Payments Report, based on a January 2025 survey of 2,487 US small businesses; Singapore Police Force advisory of 20 May 2026 on business email compromise scams involving requests to update vendors' payment account details, reporting 66 cases and at least 19 million dollars in losses since 1 January 2026, and recommending verification through a different medium, checking sender domains for subtle differences, two-factor authentication and DMARC. All linked above. We deliberately don't quote Malaysian e-Invoice turnover thresholds here, because they have been revised more than once and the phase that applies to you should come from LHDN directly. Tax treatment varies by country and by your own circumstances, so check with your tax authority or accountant before relying on any of this.

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