When you learn the invoicing basics, you have to come across the different types of invoices, including commercial and proforma invoices.
We have mentioned the different types of invoices in our earlier blogs, but this is a detailed version to help you clear the basic difference between a commercial and a proforma invoice.
What is a commercial invoice?
A commercial invoice is a business or final invoice that the seller sends as proof of sale. It is a demand for payment from the buyer. Invoice elements that help the buyer acknowledge the sale details, including the date of sale, payment to be done, bank details of the seller, and terms and conditions.
What are the key elements of a commercial invoice?
A commercial invoice is also known as a final invoice. A final invoice is a legal business document for keeping the books of accounts updated. While you create an invoice, there are key elements that need to be included.
Let’s check the key elements of a commercial invoice below:
- Invoice number
- Invoice date
- Company logo
- Company details
- Customer details
- Product or Service breakdown
- Payment total including tax
- Payment details and terms
- Payment due date
- Payment outstanding
- Pay Now Button
Commercial invoices are classified into two types: Invoice due and Invoice Paid. Here is how an Invoice due looks like!
What is a proforma invoice?
The seller issues a proforma invoice in advance of the sale. It is more like a preliminary invoice that is sent before the work is completed. Technically, it is proof of commitment between the seller and the buyer.
A proforma invoice is not considered valid in the books of accounts. It is solely issued as a commitment by the seller or service provider. The key business sectors such as import and export or IT industry generally issue the proforma invoice as commitment.
What are the key elements of a proforma invoice?
A proforma invoice has various key elements. Here is the list for your reference.
- Proforma invoice number
- Date of issue
- Customer details
- Shipping method
- Product or service breakdown
- Total payment including tax
Proforma invoices are classified into two types, Proforma or Invoiced. Once you convert your proforma invoice into a final invoice, it is no more called a proforma invoice in the books of accounts. Also, a final invoice is a valid legal document for maintaining the business accounts.
Commercial invoice Vs. Proforma invoice
A commercial invoice is different from a proforma invoice. Here are the set of differences between the two.
|A commercial invoice is a final invoice. It is considered a business document while maintaining books of accounts.||A proforma invoice is not a final invoice. It is issued as proof of commitment for the sale of a product or service.|
|A commercial invoice is classified as a due or paid invoice.||A proforma invoice is classified as proforma or invoiced.|
|It is issued before the buyer makes the payment.||It is issued before the goods or service is delivered by the seller.|
|Invoice essentials include mode of payment, payment due date, and other payment terms.||A proforma invoice only includes the total amount. It doesn’t demand payment from the buyer.|
|A commercial invoice is essential to maintain for small businesses. It serves as an important document during the company audit.||A proforma invoice doesn’t serve any purpose during the company audit.|
|An invoice is not converted into a proforma invoice.||A proforma invoice is converted into an invoice.|
How to generate proforma invoice online?
To create a proforma invoice online, you need to download an online invoicing software or application like Moon Invoice. While you download Moon Invoice, with a seven-day free trial offer, you get access to all the exclusive features of our software, including the proforma invoice. With Moon Invoice, small businesses can generate unlimited proforma invoices and can duplicate them or convert it into an invoice on the go. For more details on creating a proforma invoice online using Moon Invoice, take a free trial of our software.
Why Moon Invoice software to create multiple invoices?
Moon Invoice is a smart online invoicing software helping small businesses to generate multiple invoices for their daily accounting tasks. Our software has 66+ ready-made invoicing templates to give more interest and engagement while invoicing your clients or customers. Nevertheless, our software allows you to convert the due invoice into paid once the payment is received from the client/customer.
Moon Invoice helps you notify about the due payments via mobile app alerts. Also, you can track your business performance by downloading various business reports, including profit and loss statements, sales tax reports, expense reports, sales reports, purchase reports, etc. Hence, downloading Moon Invoice for creating and sending commercial and proforma invoices proves quite useful for businesses like you!
You can ask for any assistance by logging on to our official website. We have a customer support panel to answer your queries anytime.