All 24 Invoice Processing questions
More in Invoice Processing
What is an approval workflow and why is it important? How is input VAT/sales tax handled on purchase invoices? What is a credit note (credit memo) and how is it processed in AP? How are foreign-currency supplier invoices recorded and revalued? How are prepayments to suppliers accounted for? How do recurring invoices (e.g., rent, subscriptions) get processed efficiently? How are utility and telecom invoices with variable amounts controlled? How do you account for invoices received after period-end for goods/services already received (accruals)? What is the GR/IR (Goods Received/Invoice Received) clearing account and how is it reconciled? How do you measure and improve AP invoice processing efficiency?
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Accounts Payable & Receivable › Invoice Processing

What is a pro forma invoice and how is it treated?

Intermediate

Answer

A pro forma invoice is a preliminary bill sent before goods/services are supplied, often for quotation, customs, or prepayment purposes. It is not a valid tax invoice and should not be posted as a payable or used to reclaim tax; a proper invoice must follow. Treating a pro forma as a real invoice risks double-recording.
Real-world example A supplier sends a pro forma for a deposit; AP records the prepayment but waits for the tax invoice before booking the expense and VAT.

Common follow-ups: Can you reclaim VAT on a pro forma? | When is a pro forma used?

Vendor Management Invoice Processing Reconciliations
All 24 Invoice Processing questions