Pro Forma invoice
A pro forma invoice is given out before completing a transaction or particular work to notify the customer on how much is supposed to be paid once a good is delivered or a service is performed to completion. At times it is also used to estimate the value of goods that someone will give out as a gift. When used in offering a service it acts as a commitment to offer something or provide a service to completion, and at times the value indicated on it can change due to market changes.
The invoice normally informs the buyer and the appropriate government authorities on details of a future shipment and once released, changes should not be made without the buyer’s consent. It has also been referred to as an introductory bill of sale sent to buyers in advance of a shipment or delivery of goods and it offers preliminary product price quotation before the actual sale of that specific product.
It is very instrumental in international trade and ocean freight shipping, which is very common in Kenya, because of the port of Mombasa. It is a legally binding document issued by a seller or exporter to a buyer importer in an international transaction and it normally serves as a contract of proof of sale between an importer and exporter.
It details the prices, value as well as the number of goods under sale. It doesn’t include the conditions of the sale agreed upon by the two parties. It is normally very instrumental when a payment is being made through a bank so that the bank can be able to release funds. It contains information pertaining to the transaction, information relating to the exporter and importer and information in relation to the shipping of the merchandise.
This is commonly used to bill customers based on employees worked hours on the projects one is working on. It has proven to help a lot when solving disputes where people work in shifts, and also to tame employee attendance as well as execution of duties.
This type of invoice comes in sheets where employees normally claim for the amount of time they have worked or how much they have executed. Its basic advantages include improving productivity, or rather the speed of execution of tasks, it’s easy in the creation and in organizations’ decisions are faced on the figures from the invoices.
They are also common in industries where clients are billed hourly and this includes lawyers, creative agencies, business consultants, psychologists, and consultants.
An interim invoice is normally used in big projects to divide the project into multiple payments. It is normally adopted by contractors who take up big projects and would require funds to spend on labor, purchase materials to enable them to complete the projects in a good time.
This has helped to empower small business people in the US to apply for big projects without fear of where they will get the funds from to execute the big projects hence empowering them to be big entrepreneurs.