An Essential Guide for Exporters

Lucky you! A potential new international customer is interested in one or more of your products or services, and they want a quote. How you respond can make or break the deal.

If this was a domestic customer, you would probably reply with a simple quote. But international transactions often demand more precision, which is why you may respond with a proforma invoice—your formal quote in invoice format. A proforma invoice includes the necessary information to make this international transaction a success.

What Is a Proforma Invoice in International Trade?

A proforma invoice is a preliminary document that serves as a formal quote for international buyers, containing detailed information before goods are shipped or payment is made. Unlike a commercial invoice (which is used for billing and customs clearance purposes), a proforma invoice is essentially an estimate that looks like an invoice but functions as a negotiating tool.

A buyer may use the proforma invoice to arrange a letter of credit to pay for the goods or to arrange financing for the purchase. Certain countries may require a proforma invoice if they tightly control their currency exchange rate, require an import permit, or protect local industry by placing import quotas on certain types of goods.

Important Features of the Proforma Invoice

• It serves as a negotiating tool between you and your international customer. Ideally, you want the proforma invoice to be as close to the commercial invoice as possible.
• It is a voluntary document, and it is the preferred method in international trade. It’s good practice to include a proforma invoice even if it isn’t requested.
• It is a blueprint for the entire export process. When it’s correctly completed, it contains several key pieces of information that will be used on many of the export forms, including a final export invoice, you’ll need to create later.
• It is valid for a specific period of time. When you’re completing a proforma invoice, keep in mind that material and manufacturing prices can rise, inland and international transportation fees can change, currency exchange rates can fluctuate, and tariffs can change. Depending on the international trade term (typically one of the Incoterms 2020 terms) you and your buyer agree to use, you, as the exporter, may be responsible for these and other fluctuating costs.

When Do You Need a Proforma Invoice

As I mentioned above, there may be times when a proforma invoice is required:

• Letter of credit applications: Banks need detailed transaction information
• Import licensing: Many countries require proforma invoices for import permits
• Customs pre-clearance: Helps buyers estimate duties and taxes
• Trade financing: Enables buyers to arrange funding before shipment

And there are times when it’s simply a best practice to provide the invoice:

• First-time international customers: Builds trust and demonstrates professionalism
• High-value transactions: Provides clarity on complex costs and fees
•  Multiple shipping options: Allows buyers to compare delivery terms
• Currency-sensitive deals: Locks in pricing for specific time periods

What to Include on a Proforma Invoice

A typical proforma invoice includes the following:

• A header that identifies the document as a “Proforma Invoice”
• Complete contact information for the buyer and the seller
• Description of the goods including the six-digit Harmonized System or Schedule B number
• Pricing in the agreed-upon currency
• Country of origin for the goods
• Incoterms 2020 delivery term
• Payment terms and methods
• Estimated shipping dates
• Validity period for the quote
• Buyer’s reference number

In addition, your proforma invoice may include:

• Insurance and shipping cost breakdowns
• Currency exchange rate information
• Estimated transit times
• Special handling requirements
• Export and import compliance requirements

Export Compliance Requirements

From the moment you get a sales inquiry from a potential international customer, your company’s export procedures should kick in starting with the preparation of your proforma invoice. There are important steps every company needs to follow to ensure export compliance, which I have outlined in my blog post, 6 Basic Steps for Export Compliance.

It starts with properly classifying your products for export. If you haven’t already found the correct Harmonized System (HS) or Schedule B code for the items you intend to export, you should do it now. Customs authorities in the country of import use the HS code to determine duties and other restrictions on importing goods into their country.

In addition, the United States and some other countries have separate export control classification codes to determine if there are any restrictions for exporting goods to particular countries. In the U.S., they may be Export Control Classification Numbers (ECCN) or U.S. Munitions List (USML) codes. This information should be included on the proforma invoice to ensure proper export regulations are followed.

It’s important that both types of classifications are done right. Intentionally or unintentionally using the wrong HS numbers to avoid paying the correct duty rates or export control codes to avoid restrictions can lead to substantial penalties, loss of export privileges and even jail time.

How the Proforma Invoice Fits Your Export Process

Step 1: Receive an Inquiry

When buyers send letters of inquiry, they’re essentially requesting a proforma invoice.

Step 2: Screen the Potential Buyer and Country

After you receive an inquiry from a buyer, you first need to make sure you can do business with them. That means screening them against the various denied and restricted party lists.

Step 3: Provide a Proforma Invoice

The proforma invoice becomes your blueprint for the entire export transaction. The information you include here will populate most other export documents you’ll need to prepare later.

Step 4: Buyer Review and Negotiation

After you send the proforma invoice, the buyer will either reject or accept your proposal. As part of the acceptance process, they will most likely want to negotiate the terms of the sale. This will result in a verbal or written contract.

Step 5: Request an End-User Certificate (If Required)

Companies may sometimes request that their international customer provide a signed End-Use or End-User Certificate to provide additional due diligence to ensure the export of their goods doesn’t violate U.S. export regulations.

Step 6: Prepare the Goods and the Remaining Export Documents

Once you have finalized your sale and prepared your goods for export, you need to prepare the proper shipping documents.

Step 7: Run Restricted Party Screening (Again)

Right before the goods ship for export, run one last restricted party screening to make sure nothing has changed on any denied or restricted party list.

Step 8: Ship Your Goods

Once you’ve created all your export forms, ensured compliance with export regulations, and fulfilled the other steps of your company’s export process, go ahead and ship your goods!

Conclusion: Your Proforma Invoice as a Business Tool

The proforma invoice is far more than just a quote; it’s your opportunity to make a powerful first impression, demonstrate export expertise and lay the foundation for successful international transactions. When done right, it becomes a competitive advantage that helps you win business and build lasting relationships with international buyers.

Remember, in international trade, details matter. A well-crafted proforma invoice shows buyers that you understand the complexities of global commerce and can be trusted to deliver on your commitments.

Ready to streamline your export documentation process? Shipping Solutions export software helps U.S. exporters create more than two dozen standard export documents—including proforma invoices—in minutes, not hours. Sign up now for a free online demo of the software. There’s no obligation.

Like what you read? Subscribe today to the International Trade Blog to get the latest news and tips for exporters and importers delivered to your inbox.

This article was first published in April 2015 and has been updated to include current information, links and formatting.