Let us discuss – ‘when the pro-forma invoice is issued’ and ‘when invoice is issued’.
Once after agreeing the terms of contract of sale, the buyer has to issue a purchase order or Letter of Credit. Just before this process, the seller has to send a ‘pro-forma invoice’ to buyer, mentioning complete details of agreement of sale. Normally, purchase order or Letter of credit is opened on the basis of this pro-forma invoice sent by the seller.
So, we can treat pro-forma invoice as a document of commitment to sell the goods to the buyer as per the terms and conditions agreed between both in person, over telephone, by fax, email or any other mode of communication. In other words, we can treat the pro-forma invoice as a ‘confirmed purchase order’ from the seller, although the official purchase order has to be issued by the buyer. The pro-forma invoice is issued before sales takes place.
Once after receiving pro-forma invoice from the supplier, the buyer sends a purchase order or opens a letter of credit to the supplier. As per agreed date of shipment, the seller arrange to ship the goods. The seller issues commercial invoice at this point of time. Invoice is a prime document of sale in any business. We can call as commercial invoice. Invoice and commercial invoiceDifference between Pro forma Invoice and Commercial Invoice in Export Import Trade 3 is same. Commercial invoice is used to record ‘accounts receivable’ for the seller and accounts payable for the buyer. The content of commercial invoice is almost same as pro-forma invoice. However, the final sale price may vary with the pro-forma invoice, as pro-forma invoice is issued prior to actual sale takes place.
However, in some countries, pro-forma invoice is accepted in lieu of commercial invoice. to process import customs procedures to release cargo out of country.
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