What Is a Proforma Invoice (PI)?

In international trade, a Proforma Invoice is a "preliminary offer" or "information invoice" sent by the seller to the buyer before the actual sale takes place. Creating no financial obligation, this document is the essential basis on which the buyer obtains import permits, opens a Letter of Credit (LC) or arranges a currency transfer.

Put simply, a Proforma Invoice states: "If we agree on these terms, the commercial invoice I issue will be exactly as follows."

01Core Functions of the Proforma Invoice

In international commercial operations, the Proforma Invoice performs the following critical roles:

Offer Document

Sets out the seller's official offer regarding the nature of the goods, unit price, total amount and delivery terms (Incoterms).

Letter of Credit (LC) Preparation

Banks base the details of the transaction on the Proforma Invoice when the buyer applies to open a letter of credit.

Import and Customs Clearance

In some countries, a mandatory document to be submitted to the relevant authorities to obtain an import licence or currency transfer approval.

Basis for Advance Payment

Where the sale is on a cash-in-advance basis, the buyer makes payment according to the bank details stated on this invoice.

02Details a Proforma Invoice Must Contain

A professional Proforma Invoice must fully include the following information:

Document Title

The term "Proforma Invoice" must appear clearly.

Parties

Full name and address details of the seller (exporter) and buyer (importer).

Goods Details

Product description, quantity, unit price and total amount.

Delivery and Payment Terms

For example, CIF Dubai or FOB Istanbul; and, as the payment method, SBLC, LC or wire transfer.

Validity Period

The date until which the offer remains valid.

Bank Details

The correspondent bank details and IBAN/SWIFT codes to which the seller will accept payment.

03Why Work with NMT Danışmanlık?

An incorrectly prepared Proforma Invoice can cause delays at customs or serious disruption to bank payment processes. At NMT Danışmanlık Ltd., we guide our investors on:

preparing professional Proforma drafts, compliant with international trade norms and acceptable to banks;

determining the most suitable delivery terms under Incoterms 2020;

putting invoices relating to commodity trade through international compliance checks, across our London- and Dubai-based operations;

and related matters.