Export essentials
Posted on May 23, 2025
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Let's say you've just landed your first international buyer in Dubai. They're interested, excited even, and now they've asked you for a quotation. But not just any quote, they're asking for a proforma invoice.
If you're wondering what that is—or why it matters so much—you're not alone.
For Indian exporters, especially small or first-time ones, the proforma invoice can feel like just another piece of paperwork. But in reality? It's one of the most critical documents in the entire export process.
In this blog, we'll break down what a proforma invoice means, why it's essential for Indian exporters, what to include, and how it helps protect both your business and your buyer.
Let's get started.
What Is a Proforma Invoice?
A proforma invoice is a document you send before the sale is confirmed. It gives the buyer a complete picture of what they agree to, such as the product details, pricing, taxes, delivery timelines, and payment terms. Think of it as a formal quotation that says, "Here's what you'll get, when you’ll get it, and how much it’ll cost."
Now, in terms of legality? A proforma invoice isn't legally binding. That means it can't be used to demand payment or as proof of sale for customs. But it's still an essential part of the process because buyers often need it to apply for import licenses, set up financing, or finalise their side of the paperwork.
Imagine this scenario: A potential client from the US wants to buy your products. But before committing to you, he wants to see the final outline of what the deal looks like. This means they are asking for an official-looking document that outlines the cost, quantity, delivery terms, and expected timelines. Sending an email to them would not look that professional, and issuing a commercial invoice at this stage is not the right thing to do. This is where a proforma invoice comes into play.
Proforma vs. Commercial Invoice: What's the Difference?
When it comes to receiving international payments and cross-border transactions, invoices are more than just bills; they are like a financial proof of the transaction that determines how the whole process proceeds. Two of the most commonly used invoices are the Proforma Invoice and the Commercial Invoice. Although they look quite similar on paper, they serve completely different purposes in business. Let’s explore their differences in detail:
Proforma Invoice: A proforma invoice is sent before sending off the goods/services. It acts as a formal quotation or an estimate, giving the buyer an estimate on price, quantity, delivery terms, and payment terms.
Commercial Invoice: Sent after the order is confirmed and the goods are ready to ship. It's a legal document required for customs clearance. For more information on a commercial invoice, click here.
Feature | Proforma Invoice | Commercial Invoice |
|---|---|---|
Purpose | Quotation/estimate before sale | Final bill & payment request |
Legality | Not legally binding | Legally binding |
When Issued | Before order confirmation | After goods/services are supplied |
Customs Use | Sometimes used for import approvals | Mandatory for customs clearance |
Buyer’s Role | Helps buyer plan & arrange financing | Buyer uses it to make payment |
Seller’s Role | Provides estimated cost & terms | Demands payment & records revenue |
Pro Tip: Always label your invoice as a “proforma” invoice or a “commercial” invoice. This will avoid the confusion for buyers, banks, and customs authorities as well.
Why do businesses need porforma invoices?
For Indian exporters, a proforma invoice isn't just paperwork—it's a tool that helps you do business with confidence. Whether you're shipping textiles to Dubai or machine parts to Germany, this document can smooth out your entire export process.
1. It Works Like a Formal Quote
When you're dealing with international buyers, you can't rely on back-and-forth emails or casual conversations. A proforma invoice lays out everything upfront—product details, pricing, delivery timelines, terms, and more. It gives the buyer a complete picture of what they're agreeing to before placing the order. In other words, it's your formal offer on the table.
2. Helps Buyers with Financial Approvals
Many international importers—especially those working through banks—need a proforma invoice to secure a letter of credit or get foreign exchange (forex) approval. If they're applying for import permits, this document becomes essential. Without it, their side of the process can't even begin.
3. Gives Exporters Cost Clarity
On your end, the proforma invoice helps you plan ahead. You'll be able to estimate duties, taxes, freight charges, and compliance costs. That means fewer surprises down the road and better margin control.
What to Include in Your Proforma Invoice?
So, you're getting ready to send a proforma invoice. Great. But what exactly should go into it?
Think of this document as your export agreement on paper—it sets the tone for the entire transaction. If anything's unclear or missing, you might face delays, miscommunication, or lost business. So, let's walk through the must-haves one by one.
1. Seller & Buyer Details
Start with the basics. Include your company's name, complete address, GSTIN (if applicable), and contact information. Do the same for your buyer. These aren't just formalities—they help identify both parties clearly and ensure no confusion later on.
2. Product Description, Quantity & Pricing
Be as detailed as possible here. Mention the product name, type, grade (if relevant), quantity, unit of measure (like KG, piece, box), unit price, and the total value. The clearer you are, the smoother things go—especially for customs and banks.
3. Incoterms, Shipping Terms & Estimated Delivery
Whether it's FOB Mumbai, CIF Dubai, or EXW Delhi, stating your Incoterms sets the expectations for who handles shipping, insurance, and customs duties. Also, note the shipping method (air, sea, etc.) and estimated delivery date. Buyers need this info to plan their end of the deal.
4. Currency, Payment Terms & Validity
Specify the currency—whether it's USD, EUR, or AED. Then outline your payment terms: advance payment, letter of credit, or net 30 days. Lastly, include a validity date for the offer. This protects you from unexpected cost changes down the line.
Bottom line? A clear, detailed proforma invoice saves time, builds trust, and keeps things professional.
Related read: Learn export payment terms and their importance in global trade
How to Create a Proforma Invoice in Minutes?
Creating a proforma invoice doesn't have to be complicated. In fact, you can put one together in just a few minutes—whether you're using a spreadsheet or an invoice generator.
Here's how to do it, step by step:
Step 1: Start With the Basics
Open Excel, Google Sheets, or your preferred invoicing tool. At the top, label the document clearly: "Proforma Invoice." Then, include your business name, address, GSTIN, and contact details. Add your buyer's information right below.
Step 2: Add Invoice-Specific Details
Include the date, proforma invoice number (you can create your own sequence), and the expected validity period of the quote.
Step 3: List the Goods or Services
In a table, list out:
Product name or description
Quantity
Unit of measure
Unit price
Total value
Be as specific as you can—include make, model, size, or grade if needed. It saves everyone from confusion later.
Step 4: Include Key Trade Info
Here's where it gets crucial. Add:
HS Code for each item
Currency type (USD, EUR, INR, etc.)
Incoterms (like FOB, CIF)
Shipping Terms and expected delivery time
Payment terms (e.g., 50% advance, 50% on delivery)
Templates to Make Life Easier
You don't need to build everything from scratch. Tons of free proforma invoice templates are available online—just search for one in Excel or PDF format and tweak it to suit your business. Here is one such template for your reference.
Source: Porforma Invoice Template
Common Mistakes to Avoid in Your Proforma Invoice
Even experienced exporters can overlook the small stuff. Here are some of the most common slip-ups—and how to avoid them.
1. Vague Descriptions or Missing HS Codes
Just writing "cotton garments" or "electrical goods" doesn't cut it. Customs authorities—and your buyer—need clarity. Always include specific product names and the correct HS code. This ensures smooth customs clearance and accurate duty calculations.
2. Ignoring Payment Terms
A lot of exporters skip this step, thinking they'll discuss it later. But if you don't mention whether it's 30 days, LC at sight, or 100% advance, it leaves the deal wide open for confusion. Always spell it out clearly.
3. Leaving Out Purpose Codes
This one's easy to miss—but it matters. When foreign payments come in, banks ask for a purpose code (like P0108 for goods exports). If your proforma doesn't indicate this, the buyer's bank might delay remittance or ask for clarification, slowing everything down.
By being clear, detailed, and intentional with your proforma invoices, you not only protect your business, but you also show buyers that you're professional and reliable from day one.
Receive Your International Payments Seamlessly with Infinity
A proforma invoice is something that comes before the deal is finalised and the goods reach the customers, but once this step is over the next major step is receiving the payments from your international clients. This is where Infinity helps you. Infinity helps you in generating invoices for your customers while receiving payments from your international clients seamlessly. This is how InfinityApp helps you:
Create a multi-currency account in minutes: Infinity helps you create an Infinity multi-currency account within minutes. Just complete the sign-up process and get done with KYC, and you will have access to a multi-currency account, where you can receive money from 160+ countries.
Lowest transaction fee in the market: Infinity has helped several exporters and freelancers save up to 80% on the transaction fees. Traditional methods like banks, PayPal, Wise, and other payment platforms charge between 2%-7%. So this is where Infinity helps you save by charging just 0.5% on your transactions.
Zero hidden fees: Infinity charges 0% FX margin. This means whatever rate you see on Google is the exchange rate that is charged by Infinity. This means 0 FX margin and no hidden fees.
Manage invoices effortlessly: With Infinity’s built-in invoice generator, you can create invoices in multiple currencies in just a few clicks. So whether it is for creating a one-time invoice or a recurring invoice, Infinity’s invoice generator is there to cover you.
Conclusion
A proforma invoice might seem like a small part of the export journey—but it carries significant weight. It sets the tone for your deal, helps buyers unlock payments, and ensures you stay on the right side of customs and compliance.
Frequently Asked Questions about Proforma Invoice
1. What is the difference between a proforma invoice and a quotation?
While both documents outline pricing and terms, a quotation is usually a basic price estimate. A proforma invoice, on the other hand, includes more formal details—like product specs, HS codes, Incoterms, and payment terms. Think of it as a detailed quote that's structured like an invoice, often used for international trade and customs processes.
2. Can I modify a proforma invoice after issuing it?
Yes, absolutely. Since a proforma invoice isn't a legally binding document, you can revise it if the buyer requests changes—maybe in quantity, pricing, or delivery terms. Just make sure you issue a revised version with a precise update date or a new reference number so there's no confusion.
3. How long is a proforma invoice valid for?
That depends on what you mention in the invoice itself. Most exporters set the validity period to 30 days, but it can be shorter or longer based on your pricing strategy and forex conditions. Always include a "valid until" date so the buyer knows how long your offer stands.
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