Library of Textile, Apparel and Fashion

PI ||| Proforma Invoice ||| sheet of Garments Industry

Sharmin Akther Diba
Industrial & Production Engineer
Rajshahi University of Engineering & Technology (RUET)
Email: dibasrmn@gmail.com

In the case of export trade, both the buyer and the seller have to go through some documentation process from the beginning. And one of the most important steps in these documents is the proforma invoice. This invoice is considered to be a kind of initial contract for the export of goods. As it is the primary basis of export trade, it is also very important. Let's take a look at the proforma invoice and some general information related to this today.


What is Proforma Invoice or PI?

Proforma invoice is the primary contractual document of the buyer (importer) and the seller (exporter) in export trade. The buyer agrees to deliver the goods to the seller at a fixed price and on a specific date through this invoice. Basically, an exporter prepares a proforma invoice with signature and seal on the letterhead of his company after the sales contract is issued and submits it to the advising bank along with other documents. In many cases, the exporter prepares the proforma invoice before the sales contract is issued as per the demand of the importer. The advising bank then sends the invoice to the importer's bank. The importer's bank provides the letter of credit or advances payment using the information of the proforma invoice. In the case of TT, this proforma invoice is sent to the buyer. As soon as he received the invoice, he started the work of releasing the payment under the buyer.


Sales contracts and proforma invoices are not the same things at all. The main difference between these two documents is that all the information related to the contract is written in detail in the sales contract. The Proforma Invoice, on the other hand, summarizes all the details of the contract. Another important difference between the two documents is that the Proforma Invoice details the importer's bank information, such as the account name, number, etc., which is not included in the sales contract.



Everything contained in the proforma invoice is below:

1.       Product description, weight, price

2.       Terms of the agreement

3.       Payment method

4.       Date of shipment

5.       Exporter's Bank Details

The importance of proforma invoices:

1.       It is a sales commitment document between importer and exporter.

2.       This document is required for issuing LC by the bank.

3.       This export document is also required for bargaining later.

4.       Also serves as an import license document.

5.       It is important as a customs duty calculation document.

What issues need to be included in the proforma invoice?

Usually, a proforma invoice prepared by the exporter clearly states ‘Proforma Invoice’ as the title of the document. Also in the invoice-

1.       Exporter's name, address, telephone number, and e-mail id

2.       Importer's name, address, telephone number, and e-mail id

3.        District reference number of proforma invoice

4.       Date of issue of invoice

5.       Customer Purchase Order Number (if any)

6.       Payment Terms (Letter of Credit, Documentary Collection, Pre-Payment, TT, Open Account, etc.)

7.       Possible date of shipment

8.        Sequence number for multiple products (starting with one (1))

9.       The number of goods shipped

10.   Full product description (with a harmonized schedule or HS code, if any)

11.   Currency type (USD, Euro, Yen, etc.)

12.   Unit price and total price of the product, Mention, and price of any additional service provided by the seller, Terms of sale made using INCOTERMS 2000 (FOB, CIF, CFR, DDU, etc.), etc.

13.   Exporter's bank details, such as exporter's name, account number, Swift code, etc.

14.   Weight, quantity, case, palette, number of boxes, etc. per unit

15.   Source or country of production of goods

16.   Deadline

17.   Signatures and titles

Proforma invoice information may differ in some cases depending on the importer, exporter, and product type.

How to create a proforma invoice?

1.       Via Word or Excel file:

This method, widely used to create proforma invoices, involves adjusting an invoice template to Word or Excel and changing its invoice number and title. The exporter can also make a completely new invoice if he wants. Then you have to save the invoice and assign it to e-mail to create a formal proforma invoice. This method of making invoices is quite difficult. It takes more time. In addition, this method also increases the chances of errors in the invoice.

2.       Via invoicing software

The relatively simple way to create a proforma invoice is to use invoicing software. In this case, you can use export documentation software like Documenter. Invoicing software contains in-built proforma invoice prototypes. This method allows you to send your invoice to the buyer with just a few clicks. In this case, it takes much less time than the invoice made in Word or Excel.

Proforma invoices are important for export trade. But that's why this invoice has to be completely accurate. Not only is it risky to ensure that the conventional manual method, but also the exporter has to spend a lot of time and labor behind it. On the other hand, it is very easy to create proforma invoices using the internet. And it is possible to ensure the exact work. So, from now on, use invoicing software for proforma invoicing and make your export trade documentation more accurate.