Proforma Invoice vs Commercial Invoice: What is the Difference?

Both proforma invoices and commercial invoices are commonly used in global trade, most notably in facilitating international import and export transactions.

In a nutshell, a proforma invoice is a document sent to buyers in the negotiation phase. It helps buyers to plan for and review the cost details of the order before they make a purchasing decision. A commercial invoice is sent after the sale or delivery to ask for payment. It also serves as an important supporting document during the import and export process to facilitate the application of permits and the clearance of goods with customs agencies.

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What is a proforma invoice?

A proforma invoice is a preliminary document with details of a potential purchase. It is typically sent to buyers before goods are delivered¹. Despite its name, a proforma invoice works like a quotation instead.

It provides a price estimate for your client, aiding in their budget management and financial forecasting. It also helps buyers to request financing, such as letters of credit, and to get quotes from freight forwarders. It does not serve as an actual invoice for payment request and is not legally binding.

You should also note that in Singapore, the proforma invoice cannot be used for import permit applications², nor to declare the value of goods for your import permit, nor for the declaration of GST³. A commercial invoice with details of declared value will be required instead.

A proforma invoice should be clearly labelled and include the following information:

• Seller details
• Buyer details
• Proforma Invoice issue date
• Proforma Invoice expiry date
• Description of goods
• Shipping weight
• Price of goods
• Estimated freight costs and any other charges
• Payment terms
• Any other terms of sale

You should also note that although proforma invoices are usually used in global trade to facilitate international shipping of goods, certain buyers may also require them for the sale of goods within Singapore.

When to use a proforma invoice

A proforma invoice should be issued when an order is received or when a quotation is requested by a client. It provides the buyer with details of the costs, helping to facilitate the planning of the purchase.

For example, Singa’s Semicon receives an order for 30,000 custom semiconductors from a client based in Taiwan.

Singa’s Semicon will issue a proforma invoice to their client with details of the semiconductors to be delivered, including the price of the semiconductors, along with an estimate of all other costs and charges that may be incurred in the delivery process.

Their client would review the proforma invoice and issue a purchase order (PO) to signal acceptance of the order if they are satisfied with the details. If not, they can choose to renegotiate or turn down the purchase.

What is a commercial invoice?

A commercial invoice is a bill for goods sold, issued by a seller or exporter for global trade. It is generally required for customs clearance, can be used as a formal record of the transaction and is legally binding.

A commercial invoice should be clearly labelled and include the following information:

• Seller details
• Buyer details
• Invoice date and number
• Description of purchased items
• Harmonised System (HS) code of goods
• Origin country of purchased items
• Destination country of purchased items
• Price of purchased items
• Shipping weight
• Cost, Insurance and Freight (CIF) value and any other charges
• GST (where applicable)
• Payment terms

Singapore businesses should note that when clearing goods through Singapore Customs, you may be asked to provide a commercial invoice, packing list and Bill of Lading/Air Waybill³.

When to use a commercial invoice?

The commercial invoice is issued after the sale has been finalised.

Although it may be issued after the items have been delivered or shipped, you would likely need to produce a copy of the commercial invoice when attempting to export your goods from Singapore.

Let’s go back to the example of Singa’s Semicon’s semiconductors sale.

Upon receiving the PO, Singa’s Semicon would proceed to prepare their semiconductors for shipping and issue a commercial invoice to their client in Taiwan.

Singa’s Semicon will need to submit a copy of the commercial invoice when applying for an export permit via TradeNet⁴. They may also be requested to provide the commercial invoice along with a packing list and Bill of Lading (B/L) or Air WayBill (AWB) in order to clear their goods for export through Singapore’s customs⁵. Singa’s Semicon would have to ensure that they have the commercial invoice and other supporting documents on hand when they are ready to ship their semiconductors out.

Singa’s client may also require both proforma and commercial invoice in order to facilitate the import of goods to Taiwan.

Commercial invoice vs proforma invoice: Key differences

Both proforma invoice and commercial invoice are used in global trade and may still appear very similar to you. Here are two key differences you should note when issuing these invoices.

1. When to issue commercial invoice vs proforma invoice: A proforma invoice is issued before a sale is made, usually when your client sends an enquiry or asks for a quotation. It should include the cost of goods as well as details and terms of the sale. A commercial invoice is issued after the sale has been finalised. It serves as a bill and a key document that you and your client use to facilitate the shipping or delivery process.
2. When are the invoices required: A proforma invoice serves mostly as a quotation with information that is useful in helping your client plan for their purchase. A commercial invoice serves as a bill with payment terms and details, helping your client facilitate payment. It also serves as a document used by customs to understand the value of the goods in order to facilitate clearance, tax calculation and compliance checks.

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In summary, a proforma invoice is a preliminary document issued to a client before a sale with details of the potential sale, while a commercial invoice is the final bill issued after a sale and is typically used for payment and customs clearance.

You should issue a proforma invoice when your client asks for a quotation on your products, and issue a commercial invoice after the sale is confirmed. Your company should also have the commercial invoice on hand to facilitate the export and import process of your goods at customs.

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Sources:

1. What is a Pro Forma Invoice? | Investopedia
2. CUSTOMS | Can I use a pro-forma invoice to declare the value of my goods in the import permit?
3. Documents for Clearance of Goods | Singapore Customs
4. Overview | Singapore Customs
5. CUSTOMS | What are the required supporting documents for the exportation of goods from Singapore?

Sources checked on 28 May 2025