what on earth is 'proforma'?

[007helen]

A business I deal with suggested I 'proforma' my clients in order to cover my liabilitites and make my mark up. Obviously I've googled the word but it's still not really clear. Can it just mean request payment in advance? Any advice gratefully received.

 

[dagr]

A proforma invoice is just a more formal, detailed version of a quote. It doesn't necessarily imply advance payment, although most companies will request a proforma if paying in advance.

For example, a quote might just say: "Web design: £800 + VAT".

A proforma invoice would typically say:
Web design £800
VAT @17.5% £140
TOTAL DUE: £940

and also include all conditions, just like a real invoice.
It is not, however, a real invoice! (i.e. don't collect VAT based on it.)

A proforma invoice is sometimes used as an Order Acknowledgment, although I'm not sure if it's equally as binding.

David.

 

[Astaroth]

I cant confirm its level of binding but certainly from my previous days of handling claims an estimate was more of a stick in the ground figure "will cost around £300 + parts mate" sort of thing where as a proforma would be an exact fully calculated figure.

We were able to issue proceedings off the back of a proforma invoice but we werent able to do so off an estimate.

 

[Hayles]

Perhaps it depends on what sort of business you're in as to me, pro-forma means the company want you to pay up front before they release the goods to you (mostly for your first order with a new company).

 

[Admiral Collections]

I agree Hayles, eloquently put!



Nic :wink:

 

[SuffolkDesigns]

Proforma invoices can also be used to accompany goods across borders as evidence of their value for tax purposes

 

[Rob Holmes]

Have a read of this..

http://en.wikipedia.org/wiki/Pro_forma

Rob

 

[dagr]

Whereas "proforma" may be synonymous with advance payment in many cases, specially when dealing with small companies, it does not follow that you will get paid in advance just because your customer requests "proforma". Large organisations may request a proforma invoice purely for their internal purchasing approval process, not because they are paying in advance.

David.

 

[VeryMark]

The advantage of a pro forma invoice is that it acts as quotation for tax purposes, so that if the customer decides not to proceed you are not still liable to pay the VAT on the invoice to Customs & Excise.

 

[msketchley]

Hello. I thought I would ask the question how one goes about cancelling (if possible) a Pro Forma Invoice that has been supplied. For example, when cancelling a VAT Invoice, a Credit Note can be raised. Is this the same for Pro Forma Invoices?

I issued some Pro Forma Invoices before 31 December 2009 (when VAT rates were 15%) but now the VAT rate has reverted back to 17.5%. The Pro Forma Invoices need to be cancelled and a new Invoice needs to be sent. Would I be able to issue the old Pro Forma Invoice with "CANCELLED" typed in in large bold letters and then provide a new Pro Forma Invoice?

Any advise would be appreciated.

 

[Tej]

IMO.. under normal circumstances you don't update your ledgers on the proforma invoices.

So it would be a simple matter to just delete them

Again.. am sure the accountants will clarify

 

[elaine@cheapaccounting]

This thread is 4 years old - suggest you start a new one.

I didn't know threads were kept that long!!!!

 

[Tej]

LOL.. thanks Elaine.... got caught on that one

Happy New Year

 

[msketchley]

I would rather contribute to a thread related to Proforma Invoices than start a new one. Elaine, should I just delete the Proforma Invoice and create a new one?