Pro Forma Invoice Law and Legal Definition
A pro forma invoice is a document that states a commitment from the seller to provide specified goods to the buyer at specific prices. It is presented for payment before the dispatch of goods. It is often used to declare value for customs. It is not a true invoice, because the seller does not record a pro forma invoice as an accounts receivable and the buyer does not record a pro forma invoice as an accounts payable. A pro forma invoice is not issued by the seller until the seller and buyer have agreed to the terms of the order. In few cases, pro forma invoice is issued for obtaining advance payments from buyer, either for start of production or for security of the goods produced. If future trading is anticipated it will then be usual for an account to be set up for the purchasing company with credit facilities.
