Proforma Invoice - what is it and how to issue a VAT invoice from it?

The proforma invoice is a document that is not a financial accounting record. It is issued to the Client for the purpose of providing information about transaction details and potential payment. It can also be described as an offer to conclude a transaction, a payment request, a proposal, or a notice of invoice issuance.

A proforma invoice does not generate a tax obligation and cannot be recorded in the accounts. It also cannot be considered during settlements and does not serve as a basis for claims against its recipient. It is not included in the reports available in our report list because, like an Estimate, it is a non-accounting document.

For the recipient, the proforma invoice is a way to familiarize themselves with the preliminary visualization of the final invoice. It also provides an opportunity to prepare for the upcoming payment and serves as an informal reminder of overdue payments, which does not incur additional costs. Both parties involved in the transaction can use this document without facing consequences.
 

How to activate a Proforma document in the system?

To be able to issue a Proforma invoice, you need to activate it in the system. To do this, go to Settings > Account Settings > Your Account. In the section Additional documents to issue,  check the checkbox next to the Proforma option, and confirm the changes with the Save button at the bottom of the page. After saving, you can now issue this type of document in the invoicing system

The Proforma invoice has the same appearance as a traditional invoice:

• It has an appropriate title, date, number, and deadline for service/sale.
• The Seller and their details are provided.
• The Buyer and their details are provided.
• It includes the subject of the transaction, as well as the price, net value, tax amount, VAT value, and gross amount.
• The payment deadline is specified, although this deadline is not binding for the parties.

The only difference is the document name. Information about the type of document you are issuing is found in the Type field on the document form.


 

How to issue a VAT invoice from a proforma?

To issue a VAT invoice from a proforma directly within the system, follow these steps:

• Access the preview of the proforma invoice by clicking on its number. The list of invoices is available by clicking on Income > Proforma Invoices

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From the document preview, select Convert to invoice from the top toolbar


 

Complete the VAT invoice form, which will be automatically filled in based on the data from the proforma, and confirm with the Save button. A VAT invoice will be created in the system.

In a similar manner, you can also issue a VAT invoice from an Estimate in the system. You can find instructions on how to do this here.

Note! The Proforma document is a universal document, and as such, multiple VAT invoices can be issued from a single Proforma document for a given customer.

Also, check:
How to insert the proforma invoice number into the invoice?