As a freelancer, you may be familiar with the terms pro forma invoice and commercial invoice. While these two documents are often used interchangeably, they are not the same. Understanding the differences between the two is essential for managing your business’s financial transactions effectively. In this blog, we will discuss the differences between pro forma and commercial invoices, their respective purposes, and why it is important to know the distinction between the two as a freelancer. By the end of this blog post you will have a clear understanding of proforma invoice vs. commercial Invoice and how to use them to your advantage.
1. What’s Pro-forma Invoice?
A pro forma invoice is a preliminary or estimated invoice that outlines the goods or services to be provided and their costs. It is not a legally binding document, but rather serves as an initial proposal or estimate of the final invoice.
The purpose of a pro forma invoice is to provide a clear and concise breakdown of the costs involved in a transaction. It helps the buyer and seller to agree on the terms and conditions of the sale, including the price, quantity, and delivery details.
A pro forma invoice should include the following information:
- The word “pro forma invoice” clearly stated at the top
- Your business name, address, and contact details
- The buyer’s name and address
- A detailed description of the goods or services being provided
- The quantity and unit price of each item
- Any applicable taxes or fees
- The total cost of the transaction
- Payment terms and conditions
Pro forma invoices are commonly used in international trade for customs or pre-shipment purposes. They provide an estimate of the duties and taxes that will be imposed on the shipment, allowing the buyer to prepare for the costs in advance.
As a freelancer, you may also use pro forma invoices to provide an estimate of the costs to a potential client. This can help to clarify the scope of the project and ensure that both parties are on the same page before work begins. Here’s an example of how a pro forma invoice looks.
In conclusion, a pro forma invoice is an important tool for freelancers and small businesses alike. It helps to clarify the terms and conditions of a transaction and provides an estimate of the costs involved. By including all the necessary information, you can ensure that your pro forma invoice is clear and concise, and helps to facilitate a smooth and successful transaction.
2. What’s a Commercial Invoice?
In simple terms, a commercial invoice is a document that lists the goods or services provided to a customer along with their respective prices. It is a legal document that serves as proof of sale and payment.
The purpose of a commercial invoice is to facilitate international trade and provide important information to the buyer, seller, and customs officials. The invoice contains essential information such as the name and address of the buyer and seller, a detailed description of the goods or services, the quantity, and the price. The invoice also includes the payment terms and the method of payment.
A commercial invoice is typically used for payment and accounting purposes. As a freelancer or business owner, you can use it to bill your clients for the services provided. It is also an essential document when you need to account for the revenue generated from your business. A commercial invoice helps you keep track of your sales and ensures that you are paid for your services.
A commercial invoice should contain the following information:
- Date of the invoice
- Name and address of the buyer and seller
- Description of the goods or services provided
- Quantity of the goods or services
- Price of the goods or services
- Payment terms and method of payment
- Delivery terms and shipping details
- Any applicable taxes, duties, or fees
In conclusion, as a freelancer or business owner, you should ensure that your invoices contain all the necessary information and comply with the relevant regulations. A well-prepared commercial invoice can help you get paid promptly and avoid any disputes or delays in your business.
3. Step-by-step process to create a commercial invoice via CheckYa:
Step 1: Create your CheckYa account
If you haven’t created a CheckYa account yet, simply go to the CheckYa website (https://checkya.com/) and click on “Sign Up”. Fill in your details, verify your email address and you’re good to go.
Step 2: Click on “Send Invoices”
Once you’ve logged in to your CheckYa account, you’ll see a dashboard with various options. Click on “Send Invoices” to start creating your commercial invoice.
Step 3: Add your payment option
CheckYa offers two payment options – Stripe and Paypal. You can choose whichever option suits you best. You can also get paid in over 200+ different currencies.
Step 4: Add your customer’s details and project details
Enter your customer’s name and contact details, along with the details of the project or service you provided. You should also include the due date, currency, and the cost of your service.
Step 5: Choose the transaction fee option
If you want your clients to pay the transaction fee, simply click on “The client pays the transaction fees”. If you’d like to split the fee with your clients, select “Split the transaction fees”.
Step 6: Hit send
Once you’ve filled in all the necessary details, review your invoice and click on “Send”. CheckYa will send the invoice to your client on your behalf.
That’s it! Creating a commercial invoice via CheckYa is easy, efficient and secure. Give it a try and streamline your invoicing process today.
4. Key Differences between Pro Forma Invoice Vs. Commercial Invoice:
Here’s a table that highlights the key differences between Proforma Invoice vs. Commercial Invoice:
| Pro Forma Invoice | Commercial Invoice |
| Preliminary bill of sale | Legal document |
| Provides an estimate of the cost | Records the actual sale |
| Not a demand for payment | Demands payment from the buyer |
| Not used for customs and payment purposes | Used for customs and record-keeping |
5. Pro Forma Invoice Vs Commercial invoice FAQs:
- Is a proforma invoice a legal document?
No, a proforma invoice is not a legal document. It is a preliminary invoice that outlines the goods and their cost, which is used for informational purposes only.
- Is a proforma invoice mandatory?
No, a proforma invoice is not mandatory. It is optional and is used to provide the buyer with an estimate of the costs involved in the transaction.
- Is the proforma invoice payable?
No, a proforma invoice is not payable. It is used to provide the buyer with an estimate of the costs involved in the transaction. The actual payment is made based on the commercial invoice.
- What is the legal validity of a proforma invoice?
A proforma invoice is not a legal document and does not have any legal validity. It is a preliminary invoice used for informational purposes only.
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