Although they may seem similar, there are certain aspects that differentiate them. As a Self-Employed and Entrepreneur, surely you must use them many times. Therefore, it is important that you know how to differentiate a budget from a pro forma invoice:
The Sales quote is a document with which you indicate to your Client, how much you are going to charge them for the products or services you offer them. Reporting the amount, and on certain occasions, of the payment methodology for the services or products offered.
It is important to note that it is not a mandatory document to be made, as if the Invoice is.
Although it is true if it is highly advisable to do so, to set and indicate the conditions and obligations on the part of the Company and the Client. The Company will have the obligation to maintain the established prices. And on the part of the Client, make the purchase or final acquisition of the product or service.
Of course, for the Budget to be valid , it must be signed by both parties.
Finally, note that a Budget is not required to have the same format as the subsequent Sales Invoice.
The Proforma Invoice is a document that grants a pact by which the Company providing the service or product, agrees, with firm conditions and prices to respect in the event that the Buyer (Client) complies with the payment.
Normally, Clients will ask Companies for a pro forma invoice, when they are pending subsidies or operations subject to approval in front of a bank or agency in order to be awarded the money.
In the proforma invoice, it is mandatory that the word “Proforma Invoice” appears and that the design and format are identical to the subsequent final Invoice.
Note that the Proforma Invoices have no accounting or fiscal validity, since they only serve as a communication tool for the Client.
Pro forma is a Latin phrase that refers to what is developed in tune with a form or a formality. The expression, which is usually written as pro-forma or proforma, is applied to those invoices or receipts that are used to justify the operations carried out after the date of the account statement in which they are registered.
A proforma invoice can be one that is sent to a buyer before the closing of the transaction. It is not a real invoice in tax terms, but it is a document that serves as a company’s commitment to sell certain products at a certain price.
This type of proforma invoice, therefore, should not be recorded in the accounts. It is used to specify in a document a sale that has not yet been finalized. In case the buyer accepts its terms, the sale is closed and the seller must issue the corresponding invoice in accordance with the provisions of the law .
In the field of international trade, the proforma invoice is usually delivered to customs when the actual invoice is not available at the time of shipment.
The notion of proforma also appears in the field of law . In this case, it is a judgment whose sole purpose is to enable the development of a legal process. This type of sentence obeys a formality, and not a specific need of the process.
Proforma, in the field of linguistics, is the morpheme or the word that is in a position to replace a phrase , although, unlike this one, it does not have lexical content in itself, but its referent must be determined by the situation communicative or by its antecedent.
The communicative situation is part of the theory of communication and refers to the framework or context, the space and the moment in which any communicative process takes place . The antecedent, for its part, is a noun, noun phrase (group of words that has a noun or pronoun as the nucleus) or proper name to which a pronoun refers ( relative or not). For example, in the sentence “I couldn’t see the movie you recommended to me , ” which is the relative pronoun and refers to the noun phrase the movie .
Main differences between the Quote and the Proforma Invoice:
-A Proforma Invoice is used when the relationship with the Client is already more advanced to give him more information.
-In a Sales Budget, it is not necessary to detail all the aspects that finally intervene in a final Invoice.
-The Proforma Invoice is much more formal than the Budget.
-The budget usually has a rather indicative nature and is subject to many exchange variables and lacks value if there is no signature on both sides.
-The Proforma Invoice, most of the time is requested for Credit and Financing reasons, since Banks and Savings Banks request this document from the Client so that the request for money is justified.
-On the other hand, the Budget is used many times in sectors that are very difficult to know and know the final price: Engineering, Construction, etc … or, because the Client himself wants more flexibility to study the offer and possible variations of the Budget.
Therefore, we can highlight that Budget and Proforma Invoice, in general features have the same purpose: To inform the Client of the conditions of the provision of service or sale of a product. However, the main differentiation will come from the Client’s need, and it will be he who indicates if he needs a Proforma Invoice or not.
With Blueindic, the online Billing program for the Self- Employed, you will be able to manage with ease and simplicity any document necessary in your business: Budget, Albaran, Proforma Invoice, Final Invoice. In addition, you can automatically transfer a document to another without having to fill in all the data again.