If you are in the business of import and export, you need to understand the difference between pro forma invoice and commercial invoice. These two are key documents while dealing with customers.Every time a business deal is finalised the buyer has to send in a purchase order to the vendor. He could alternatively open a letter of credit.
Before the buyer can issue a letter of credit to the vendor, he has to send a pro forma invoice to the buyer. This document contains all the necessary information and terms pertaining to the sale.
Pro forma invoice is the document that shows a commitment on the part of the seller to sell the goods according to the pre decided terms and conditions.
Once a pro forma invoice is issued to the buyer, he has to issue a purchase order. Once the seller receives the purchase order, he gets a confirmation to send the goods. He now ships the goods to the buyer along with a commercial invoice. The commercial invoice is more like an invoice and the legal document of the actual sale.
This document is used to record the AR for the seller and AP for the buyer.
You can also know the difference between a purchase order and an invoice.
Choosing the right online tool is crucial to managing your pro forma and commercial invoices. Invoicera is a very useful online tool which helps with sending online pro forma invoices and commercial invoices. You can easily use the estimates feature of Invoicera to send in your pro forma invoices. The complete payment cycle of your import and export business can be easily managed using this helpful tool.