You have discussed the price, and the buyer now asks for a PI. Before sending it, check that you both mean the same product, quantity and packaging. A clear proforma invoice puts those details in one place and gives the buyer a proposal they can review.
PI is commonly used as an abbreviation for proforma invoice. This guide explains a practical way to prepare one for an export discussion. It is not a universal statutory format. Your product, buyer, bank and destination may require additional information or different wording.
What is a proforma invoice?
The International Trade Administration describes a proforma invoice as a quotation in an invoice format. Depending on the transaction, a buyer may use it when arranging an import licence, pre-shipment inspection, a letter of credit or foreign-currency transfer.
That does not mean every buyer needs each of those arrangements. Ask what the document will be used for. A PI prepared for internal purchase approval may need different supporting detail from one being submitted to a bank.
A proforma invoice is not proof that goods have shipped or that payment has cleared. Its legal effect can depend on the agreed terms and surrounding correspondence. Avoid blanket claims that it is always binding or never binding.
Proforma invoice versus quotation and commercial invoice
A quotation can be a short commercial proposal. A proforma invoice presents that proposal in a structured invoice-style document. The two may contain much of the same information, but the PI helps organise the proposed transaction.
A commercial invoice records the goods and transaction information for the actual shipment and is used in export and import clearance. Do not simply rename an old PI without checking what was finally agreed and supplied.
| Document | Main purpose | Practical check |
|---|---|---|
| Quotation | Present a price proposal | State assumptions and validity |
| Proforma invoice | Organise proposed transaction details | Confirm goods and proposed terms |
| Commercial invoice | Document the shipment transaction | Match actual shipment information |
| Packing list | Describe how goods are packed | Check cartons, weights and contents |
The table explains functions, not every legal requirement. A buyer’s instructions should still be checked against the applicable rules rather than followed blindly.
Confirm the requirement before opening a template
Start with a qualified enquiry. Confirm the product specification, quantity, selling unit, packaging and destination. If the buyer needs private labels, clarify whether the artwork and packaging costs are included.
Check product availability and proposed timing with the team responsible for supply. Do not insert a convenient delivery estimate simply because the template has a blank field.
Ask for the correct buyer legal name and address. Where the billing party, payer and consignee differ, identify their roles and decide which details belong on the document. Unexplained differences should be resolved before proceeding.
Identify the seller, buyer and document
Include the seller’s legal business name and address, the buyer’s details and a contact for questions. Use genuine business identifiers where appropriate and confirmed. Do not invent registration numbers to make the document look complete.
Assign a unique PI number and issue date. A reference such as PI-2026-014 is an illustrative numbering approach, not a prescribed format. Use whatever system lets your team trace the document reliably.
Label the document clearly as “Proforma Invoice.” When revising it, add a version or revision reference and indicate which earlier version it replaces. This helps prevent a buyer acting on an outdated price.
Describe each product precisely
Use a product description that someone outside your organisation can understand. Include model, material, size or other relevant specification. Internal shorthand alone may not tell the buyer what is included.
For packaged goods, describe the pack configuration and the pricing unit. For example, specify whether the unit price refers to one item, one pack or one carton. If quantities are expressed in cartons, explain the contents per carton.
Record optional items separately. A buyer should not have to guess whether accessories, spare parts or custom labels are part of the base price. Link technical specifications to the correct product line and version.
Show quantity, price, currency and totals
State the currency beside the price fields and total. A currency symbol can be ambiguous across countries, so use a clear currency code where suitable.
For each line, show quantity, selling unit, unit price and line value. Confirm whether a discount is already reflected in the unit price or deducted separately. Avoid applying the same discount twice.
Itemise additional charges where they form part of the offer. Freight, packaging, tooling or inspection charges should not appear as unexplained additions after the buyer approves the document. If a charge is still estimated, identify it as estimated.
An illustrative PI calculation
Consider a fictional order for 200 unbranded metal storage boxes at USD 18 each. The goods value is USD 3,600. If separately agreed export packing costs USD 120, the proposed total becomes USD 3,720 before any other explicitly stated charges.
| Item | Quantity | Unit price | Line total |
|---|---|---|---|
| Metal storage box | 200 pieces | USD 18 | USD 3,600 |
| Agreed export packing | 1 charge | USD 120 | USD 120 |
| Proposed total | USD 3,720 |
These figures are illustrative, not market prices. Suppose the parties propose a 30% advance against this total. The calculation would be USD 1,116, with USD 2,604 remaining. Whether those terms suit the transaction requires a separate commercial decision.
The example intentionally leaves freight out. The PI must say what the price includes and excludes rather than letting the buyer assume transport is covered. Never use a fictional example as your actual quotation.
State delivery terms and the named location
If the parties use an Incoterms rule, write the selected rule, the named place or port and the applicable edition. A three-letter abbreviation without a location leaves an important part of the agreement unclear.
Use the rule only after confirming that it fits the transport arrangement. Ask a freight professional to explain responsibilities that your team does not understand. Do not assume that the party paying freight necessarily carries every transport risk.
Incoterms do not settle every issue in a sale. Payment, product quality, ownership transfer and dispute handling still need appropriate agreement. The PI should work with the wider order terms rather than substitute for them.
Make payment and timing conditions specific
State the proposed payment method, percentage or amount, and the event that triggers each payment. “Balance before shipment” may need clarification about the documents or notice the buyer receives before paying.
Bank information should come through an authorised and verified channel. Where a buyer is unfamiliar, treat a changed beneficiary as a reason to pause and confirm, not as a routine formatting correction.
For timing, distinguish production completion, dispatch and expected arrival. Explain dependencies such as payment confirmation, artwork approval or availability. If timing has not been confirmed, say so instead of promising an unsupported date.
Check the PI before sending
Compare the document with the buyer’s latest requirement and your costing sheet. Check quantities, units, arithmetic, currency, addresses, payment conditions and version number. Confirm that totals reflect the final scope.
Ask a second person to check high-value or complex offers where practical. Their job should be specific: verify arithmetic, confirm production assumptions or compare the specification. A vague “looks fine” is less useful than a defined check.
Save the approved file and the correspondence supporting its terms. Send a readable PDF when appropriate while retaining an editable internal version. Make sure attachments are the correct revision before pressing send.
Common mistakes exporters should avoid
The most common practical errors are unclear selling units, copied addresses, missing currency and unexplained delivery terms. Another is quoting a pack configuration that production cannot supply.
Avoid presenting the PI as evidence of payment. Confirm funds through the appropriate banking process. Also avoid copying certificates or product claims into the document without checking their scope.
Do not promise that one standard template satisfies every market. Templates help organise information; they do not determine whether the transaction is compliant or commercially sensible.
Frequently asked questions
Does every export PI need the same fields?
No. The useful core details are similar, but buyer, banking and destination requirements can vary. Confirm the intended use and applicable requirements.
Should the commercial invoice match the PI exactly?
The shipment documents should reflect the actual agreed transaction and goods. If terms changed after the PI, reconcile the changes rather than copying outdated information.
Can I ask for an advance using a PI?
A PI can communicate proposed payment terms. Agree those terms with the buyer and confirm the proper payment process. The document alone does not establish receipt of funds.
Related steps and research basis
Before preparing the PI, qualify the export enquiry. Before accepting a new buyer’s arrangements, check their identity and authority. Keeping those steps separate makes the commercial document easier to understand.
Research basis: International Trade Administration, “Pro Forma Invoice,” “Commercial Invoice” and “Negotiate an Export Sale”; International Chamber of Commerce, Incoterms 2020 overview. Calculations and workflows are illustrative editorial guidance. AI-assisted draft prepared for human editorial review.