What a proforma invoice is (and is not)
A proforma invoice is a priced document that looks like an invoice but comes before the sale is final. It tells the customer exactly what they will receive and what it will cost, so they can arrange payment, approve a purchase or apply for funding. It is not a demand for payment for goods already supplied, and it is not a tax invoice: it does not record a sale in your accounts, and VAT or GST shown on it is only an indication.
That is why SmallKits prints “This is not a tax invoice” under the number, gives it its own numbering (PF-0001, PF-0002…) separate from your invoices, and marks the status as “Awaiting payment”.
Proforma, quotation or invoice?
| Quotation | Proforma invoice | Invoice | |
|---|---|---|---|
| Purpose | Offer a price | Request payment before supply | Request payment for supply |
| Customer has agreed? | Not yet | Usually yes | Yes |
| Tax invoice? | No | No | Yes |
| Numbering | QT-0001 | PF-0001 | INV-0001 |
Use a quotation when the customer is still deciding. Use a proforma when they have decided and need a formal document to pay against, which is common for schools, churches, companies and government offices whose finance teams must approve spending before money moves. Once payment arrives, issue an invoice.
What to include
- The words “Proforma invoice”, a proforma number and the date of issue.
- Your business details and, if registered, your tax ID.
- The customer’s name and address, and a delivery address if it is different.
- Each item with quantity, unit price and amount, and tax on its own line.
- A valid-until date, because prices and stock change.
- The deposit you need, if any, and how to pay it.
- Delivery time and any other conditions that matter to the buyer.
Asking for a deposit
Choose “Ask for a deposit” under the items and type either an amount (500) or a percentage (50%). A percentage is calculated from the total including tax and rounded to your currency’s smallest unit, then shown as “Deposit due” under the total. If you type an amount larger than the total, SmallKits uses the total and tells you, so the document never asks for more than the order is worth.
From proforma to invoice
When the customer pays, open the proforma from Documents and choose “Make invoice”, or use the button that appears right after you download. The customer and items come across unchanged, the invoice gets the next invoice number, and the link back to the proforma is kept. If the customer paid only the deposit, mark the invoice as unpaid with the full total; issue a receipt for the deposit received.
Country notes
India: proformas are widely used for import, export and bank financing. Include your GSTIN, the HSN or SAC codes in the item description, and the place of supply. GST is charged on the tax invoice, not the proforma.
Kenya and East Africa: institutions often require a proforma before raising a local purchase order (LPO). VAT-registered businesses must issue the final tax invoice through KRA’s eTIMS; the proforma itself is outside eTIMS.
United Kingdom and EU: a proforma is not a VAT invoice, and the customer cannot reclaim VAT on it. Say so clearly, as SmallKits does.
United States: proformas are common for international shipments, where customs uses them to estimate value. Include the country of origin and HS codes for goods crossing borders.
Common mistakes
- Using invoice numbers for proformas, which leaves gaps in your invoice sequence. Keep them separate.
- Forgetting the valid-until date, then being asked to honour last year’s prices.
- Recording a proforma as income. It is not a sale until the invoice.
A worked example
Greenfield Primary School needs 40 double desks before the new term. The supplier sends a proforma invoice for 40 desks, 8 teacher’s chairs and delivery and assembly, with a 50% deposit due. The school bursar takes the proforma to the board, which approves the spending and pays the deposit. The supplier then makes the desks, delivers them with a delivery note, and issues the final tax invoice for the balance. The proforma is the document that made the approval possible.
Terms explained
- Valid until
- The date after which the prices may change.
- Deposit due
- The part of the total the customer should pay before you supply.
Updated 2026-10-29