Guides · Invoicing
Proforma invoice, explained
A proforma invoice is a preliminary bill — a quotation set out in the shape of an invoice — that a seller sends before the sale is confirmed. It tells the buyer what the supply will cost, but it is not a demand for payment.
What a proforma invoice is for
A proforma invoice is used to give a buyer a firm estimate: the items, quantities, prices, and likely taxes for a proposed supply. It helps the buyer arrange a purchase order, budget, or approval before committing.
Because it precedes the actual supply, a proforma invoice is not recorded as a sale and does not affect your books or your GST until a real tax invoice is raised.
Proforma versus tax invoice
The key difference is finality. A tax invoice records a completed supply, charges GST, and supports input tax credit. A proforma invoice does none of these — it is a quotation, and it can change before the final invoice.
Once the buyer confirms and the supply happens, the seller issues the tax invoice, which is the document that counts for tax and accounting.
How Lekha treats quotations and invoices
Lekha records what your documents say and tracks the money on both sides — what you owe and what you are owed. It records and tracks; it does not replace your accountant.
When a proposed sale becomes a real one, Lekha generates the GST-ready tax invoice against the order, so the estimate turns cleanly into a recorded supply.
Questions
- Is a proforma invoice legally binding?
- No. A proforma invoice is a quotation, not a demand for payment or a tax document. It can change before the final tax invoice is issued.
- Does a proforma invoice attract GST?
- No GST is accounted for on a proforma invoice. GST is charged on the tax invoice issued when the supply is actually made.
- When should I send a proforma invoice?
- Before a sale is confirmed — to give the buyer the expected cost so they can raise a purchase order or get approval.