In some businesses, the actual invoice is generated only when the payment is received. If there is any mismatch, the buyer can raise an objection, and the same can be revised before the actual invoice is generated. It informs the buyer of the estimated sale price of a product/service yet to be delivered, the total cost of the shipment, contents of a shipment, their value, shipping costs, and other important details. While a quotation just contains very basic details of the sale like the product price, shipping, etc., the proforma invoice format adds more details, making the sale more apparent to the buyer. They act as an informal binding agreement between the two parties, where both are aware of the terms and conditions of doing business. Proforma invoices are particularly crucial when two enterprises enter into a business agreement for the first time. On the other hand, it informs the buyer about the product and payment details. A proforma invoice declares the seller’s commitment to delivering the desired products/services to the prospective customer.
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