What is a proforma invoice?

A proforma invoice is a “here is exactly what this will cost, and here is how to pay it” document you send before a sale is finalised. It looks like an invoice, deliberately — but it is not a demand for payment, and in accounting terms it is not an invoice at all.

When a proforma is the right document

• Payment before delivery. The most common use. A new customer with no credit history, or an order you won’t release until the money is in, gets a proforma to pay against.
• The customer needs paperwork to release funds. Many organisations cannot raise a purchase order or get spending approved without a document showing the exact figures. A proforma gives them one without you booking a sale that may not happen.
• Deposits on made-to-order work. Where you need materials paid for up front, a proforma sets out the deposit and what it covers.
• Exports and customs. A proforma is routinely used in shipping documentation to declare the value and description of goods before a commercial invoice exists.

If you are still trying to win the work rather than confirm agreed figures, what you want is a quote, not a proforma.

What to put on one

A proforma should contain everything the final invoice will, so there are no surprises:

• Your business name, address and contact details
• The customer’s details
• A full description of the goods or services, with quantities and prices
• The total payable, and VAT shown separately if you are VAT registered
• Payment details and how long the figures hold good for
• A proforma reference number from its own series — not a number from your invoice run
• The words “Proforma invoice — not a VAT invoice”, prominently

The valid-until date matters more than people expect. Prices move, and a proforma that a customer resurfaces four months later is an argument you don’t need.

Why it is not a VAT invoice

This is the part that has real consequences:

• Your customer cannot reclaim VAT from it. Only a proper VAT invoice supports an input tax claim. A customer who files your proforma and reclaims against it has a problem waiting for them.
• You should not record it in your sales or VAT accounts. No sale has taken place. Booking proformas as sales inflates your turnover — which also distorts the £90,000 registration threshold calculation.
• It does not create a debt. Because it isn’t a demand for payment, there is nothing to enforce and no basis for statutory late payment interest if it is ignored.

Tax points: the bit that actually catches people

Issuing a proforma does not create a VAT tax point. Receiving payment does.

So the moment a customer pays against your proforma, the clock starts: if you are VAT registered, you need to issue a proper VAT invoice, normally within 30 days of that payment. The proforma has done its job and now needs replacing with the real document, showing your VAT number and the VAT breakdown in the form set out in what a VAT invoice must include.

Sending only a proforma and never following it with a VAT invoice is the most common mistake here. Your customer is left unable to reclaim, and your own VAT records do not reflect a supply that has actually happened.

Proforma, quote and invoice side by side

	Quote	Proforma	Invoice
Purpose	Win the work	Confirm figures before supply or payment	Demand payment for a supply made
Stage	Before agreement	After agreement, before supply	At or after supply
Creates a debt?	No	No	Yes
Supports a VAT reclaim?	No	No	Yes, if a VAT invoice
Goes in your sales records?	No	No	Yes

In practice most small businesses go quote → invoice, and only reach for a proforma when a customer specifically needs to pay or get approval in advance.

Making one

The invoice generator produces a clean document you can use as a proforma. Build it exactly as you would the final invoice, then add a note such as “Proforma invoice — not a VAT invoice. Valid until 30 October 2026.” so its status is unmistakable.

Keep proformas in their own numbering series — PRO-0001 — so they never create gaps in your invoice sequence. When the customer pays or the supply goes ahead, raise the proper invoice with the next number from your invoice run.