Sometimes, the buying and selling process is a bit long and bureaucratic. It is possible that the agreement gets complicated and it is there, when we need to present drafts to facilitate the process. See below what is the difference between an invoice and a proforma invoice, when to use it and how it can help you in this buying and selling process.
What is a quotation or proforma invoice?
It could be said that it is a quotation or a “draft” of the commercial invoice that is sent to a buyer with the details that will later be included in it with the intention of informing the customer about them.
In this sense, it is a document that declares the seller’s commitment to provide the specified goods or services to the buyer at a specified price.
These are not recorded in the accounts and do not form part of the accounting or tax returns, since they do not have the same validity before the tax authorities.
The proforma invoice specifies the product or service, the price, the taxes corresponding to the conditions of the invoice and any other specification so that the customer can observe everything before signing the document.
Electronic invoicing will now be mandatory in Spain, read more about it here.
What is a proforma invoice for?
Knowing all the above, then this invoice has only informative character to agree the conditions of purchase and sale of a service or product. With this we do not mean that it has no utility, on the contrary, it can serve in cases of international operations or to justify subsidies.
On the other hand, if there is a problem with a client because he does not want to pay you or because no agreement is reached, the proforma invoice is legally valid and proves that there has been some indication of activity in which he is obliged to comply with the payment.
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Difference between invoice and proforma invoice
A commercial invoice and a proforma invoice have very similar characteristics, they even contain the same content. The most important difference between the two is that the former is valid for tax purposes, a definitive document that cannot be modified.
Unlike the proforma, which is a document prior to the issuance of the invoice and will never be legally valid.
Likewise, we can also clarify that it is not a quotation or a delivery note since they are delivered at different moments of the negotiation.
Generally, a quote is sent first when someone requests information about what we offer. The price may change in the future and it does not mean that the client will hire you for what he/she needs.
Then the proforma invoice will be sent to confirm that the client agrees with the performance of the service and in the conditions that have been agreed. In addition, we will also specify what is required and the completion time.
In the next step, the commercial invoice is sent, the customer pays, and finally, the delivery note would be made indicating that the product or service has been completed or has reached the hands of the person or company.
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How to make a proforma invoice online?
We can add as much data as we see necessary. Normally, the same data of a conventional invoice is added, indicating that it is a proforma invoice in the header.
We can also include a numbering to keep control of the invoices issued, always separating them from the commercial ones so as not to confuse them.
The fastest way to issue a proforma invoice is through an invoicing system that makes them automatically and you only have to change the internal data of the customer and the price.
Software saves time and money, increases productivity and improves efficiency, while complying with all legal requirements. It stores documents securely and manages access in large companies.
Knowing the difference between an invoice and a proforma invoice can help you in any sale or purchase, use it and reach faster agreements. Gestion Direct offers a wide range of digital solutions to digitize and automate the processes of your company. Write to us at gestiodirect@gd.eu and request a free trial.
