A proforma invoice is a preliminary bill a seller sends to a buyer before a sale is confirmed. It sets out what will be supplied, the quantity, and the expected cost, so both sides agree on the deal in writing first. It is not a demand for payment, and it is not a tax invoice.
Think of it as a formal "here is exactly what you'll get and what it will cost" document. You send it after a buyer shows real interest but before you raise the actual invoice. It gives them something solid to approve, arrange payment for, or hand to their bank or customs agent, without committing either side the way a real invoice does.
A proforma invoice is a preliminary bill sent before a sale is confirmed — it shows the goods or services, quantity, and expected cost so both sides agree on the deal in writing first.
If you quote overseas buyers, confirm bulk orders before production, or take deposits, you already need this document, even if nobody ever told you its proper name. This guide covers what a proforma invoice is, what goes on it, when to send one, how it differs from the invoice, quotation, tax invoice, and commercial invoice, and a free Malaysia-ready template you can download and fill in today.
01. What is a proforma invoice?
A proforma invoice ("pro forma" and, informally, "performa" invoice are the same thing) is a document a seller prepares to show a buyer the details of a proposed sale before it is final. It lists the goods or services, the quantity, the unit price, and the total expected cost, along with the terms the seller is offering.
Here is the plain version: it is a "before" bill. It looks like an invoice and carries the same numbers, but it does not ask to be paid and it does not go into your tax records. Its whole job is to get agreement on the deal in writing so the real sale can go ahead cleanly.
Two things it is not, and this trips people up:
- Not a demand for payment. A proforma does not create a debt. The buyer has not been billed yet.
- Not a tax invoice. You cannot use it to claim or account for tax. The proper tax document comes later, once the sale is confirmed (more on that in section 06).
That is why sellers use it so freely. You can send a proforma, adjust it, and resend it as many times as the negotiation needs, without touching your accounts or your tax position.
Four documents get mixed up in a sale. Here's how they line up before we go deeper:
| Document | When it's sent | Asks for payment? |
|---|---|---|
| Quotation | Earliest — buyer is shopping around | No |
| Proforma invoice | Buyer is serious, sale not yet confirmed | No |
| Invoice (tax invoice) | After the sale is agreed | Yes |
| Commercial invoice | With the shipped goods (exports) | Yes |
02. When do you use a proforma invoice?
You reach for a proforma invoice at the moment a buyer is serious but the sale isn't locked in yet. It turns a verbal "yes, roughly" into a clear, itemised document both sides can act on, without either of you being committed the way a real invoice would commit you.
The common situations for a Malaysian SME:
They see the full RM (or foreign-currency) cost, terms, and shipping before committing.
You pin down exactly what will be made, and at what price, before a custom or bulk job starts.
They use it for internal approval, financing, a letter of credit, or customs paperwork.
The deposit and the balance are stated clearly — what to pay now, what to settle on delivery.
The rule of thumb: send a proforma when you want to confirm the deal, and raise the real invoice only once the buyer has said yes and you're ready to bill and record the sale.
03. What a proforma invoice looks like (anatomy)
A proforma invoice looks almost identical to a normal invoice, with one key difference: it is clearly labelled "PROFORMA INVOICE" at the top, and it says plainly that it is not a tax invoice or a demand for payment.
Here is what every proforma invoice should include — the numbered callouts on the sample match the checklist below it:
- ✓ ① The title "PROFORMA INVOICE", front and centre
- ✓ ② Seller details — your business name, address, contact
- ✓ ③ Buyer details — the customer's name and address
- ✓ ④ A proforma number and date
- ✓ A validity date — how long the quoted price and terms hold
- ✓ ⑤ Itemised goods or services — description, quantity, unit price
- ✓ ⑥ Estimated SST where it applies — shown as estimated
- ✓ ⑦ The total in RM — the full expected cost
- ✓ ⑧ Payment and delivery terms — deposit, balance, currency, shipping
- ✓ ⑨ A clear "not a tax invoice, not a demand for payment" note
04. Proforma invoice vs invoice
This is the question most people actually search for, so let's answer it directly: the difference between an invoice and a proforma invoice is timing and commitment. A proforma comes before the sale is confirmed and is not a request for payment. An invoice comes after, records a real sale, and asks to be paid.
| Proforma invoice | Invoice (tax invoice) | |
|---|---|---|
| When it's sent | Before the sale is confirmed | After the sale is agreed |
| Purpose | Confirm the deal, show expected cost | Bill the buyer, record the sale |
| Demands payment? | No | Yes |
| Creates a debt? | No | Yes — money is now owed |
| Valid for tax / records? | No | Yes |
| Can be changed? | Yes, freely — resend as needed | No — it's a fixed record once issued |
"Is it okay to pay a proforma invoice?" Yes, a buyer can choose to pay against a proforma, and often does when paying a deposit or an advance. But paying it doesn't turn it into a tax invoice. Once payment is agreed, the seller should still issue the proper invoice so both sides have a valid record of the sale.
For the full side-by-side — every row, when to send which, and the SST/e-invoice angle — see proforma invoice vs invoice.
05. Proforma invoice vs quotation
A quotation and a proforma invoice both come before the sale, so they get mixed up. The difference is how formal and detailed each one is.
| Quotation | Proforma invoice | |
|---|---|---|
| Stage | Early — "what would this cost?" | Later — "here's the confirmed deal, ready to act on" |
| Detail | Often a price estimate or range | Fully itemised, invoice-style layout |
| Feels like | An offer | A near-final bill (without the payment demand) |
| Used for | Comparing options, budgeting | Approvals, deposits, financing, customs |
In practice: you send a quotation when a buyer is shopping around, and a proforma invoice once they've chosen you and you want to pin down the exact order. Both are non-binding, but the proforma is the more committed, ready-to-transact version.
06. Proforma invoice vs tax invoice (Malaysia)
This is the distinction that matters most for a Malaysian seller, and it's the one the international guides skip. A proforma invoice is not a valid tax invoice. It cannot be used to account for SST, and your buyer cannot use it to support any tax claim.
The sequence works like this: you send a proforma to confirm the deal, the buyer agrees, and only then do you issue the proper tax invoice (an e-invoice, in Malaysia's LHDN system) that records the sale and handles the tax correctly. The proforma is the preliminary step; the e-invoice is the official one.
| Proforma invoice | Tax invoice / e-invoice | |
|---|---|---|
| Purpose | Agree the deal, preliminary | Record the sale, official |
| Tax effect | None | SST handled & e-invoice submitted |
| When | Before the sale is confirmed | After the sale is confirmed |
Keep it simple in your head: a proforma invoice is a "before" document with no tax effect, and a tax invoice / e-invoice is the real, recorded sale. A proforma is a useful tool to agree terms, but it never replaces the e-invoice you issue once the sale is confirmed. When you're ready for that step, our LHDN e-invoice guide walks through issuing the proper tax document.
07. Proforma invoice vs commercial invoice
If you export, you'll meet the commercial invoice too. The short version: a proforma goes out before shipping to confirm the deal; a commercial invoice goes with the actual shipment and is the document customs uses to clear the goods and assess duties.
| Proforma invoice | Commercial invoice | |
|---|---|---|
| When | Before the goods ship | With the shipped goods |
| Role | Confirm the order, help arrange payment/customs prep | Official record for customs clearance and duties |
| Binding? | No | Yes — it's the real transaction record |
A buyer often uses your proforma to arrange payment and pre-clear paperwork, then the commercial invoice travels with the shipment.
08. How to write a proforma invoice (step by step)
Writing a proforma invoice is straightforward once you know the fields. Here's the order that works:
You can do all of this in a spreadsheet or a Word document. The catch is doing it repeatedly, keeping the numbering tidy, and then turning the accepted proforma into a real invoice without retyping everything — which is where a proper invoicing tool saves you the double work (section 12).
09. Free proforma invoice template (Malaysia)
To make this easy, we've prepared a free proforma invoice template built for Malaysia — RM totals, an estimated-SST line, and the "not a tax invoice" note already in place. Fill in your details, send it, and you're done.
You get three formats, so you can use whichever suits you:
Free · No sign-up · RM & SST-ready · Works on your phone or PC.
10. Filled examples
Sometimes it's clearest to see one filled in. Here are two illustrative examples (fictional businesses, example figures) showing how a proforma invoice reads in real use.
11. Common mistakes to avoid
A few small mistakes cause most of the confusion around proforma invoices. Watch for these:
Turn an accepted proforma into a real invoice without retyping
- ✓ Raise professional invoices and keep them all in one place
- ✓ Issue LHDN-ready e-invoices when a sale is confirmed — same system
- ✓ One transparent yearly price, no consultant and no setup fee
12. How Niagawan handles your invoicing
The fastest fix for the double-work problem is to stop retyping. Start with the free template above — it covers the proforma itself. When you're ready to bill and record the sale properly, that's where a proper invoicing system earns its keep.
Niagawan is cloud accounting and invoicing built for Malaysian SMEs. You raise professional invoices, keep them in one place, and issue LHDN-ready e-invoices when a sale is confirmed — all in the same system, so nothing gets retyped or lost. It's e-Invoice Ready and LHDN Compliant, and over 40,000 Malaysian businesses have used Niagawan since 2016 (4.7★ from 500+ Google reviews).
If you want to see how it fits your business, take a look at Niagawan Plus — cloud accounting and invoicing for Malaysian SMEs, or see the honest yearly pricing (Plus is RM497/year). No consultant, no setup fee — sign up and go.
Proforma invoice FAQ
What is a proforma invoice?
A proforma invoice is a preliminary bill a seller sends before a sale is confirmed. It shows the goods or services, quantity, and expected cost, so both sides agree on the deal in writing. It is not a demand for payment and not a tax invoice.
What is the difference between an invoice and a proforma invoice?
A proforma comes before the sale is confirmed and does not ask for payment. An invoice comes after, records a real sale, creates a debt, and is valid for your tax records. Same look, different job and different timing.
Is it okay to pay a proforma invoice?
Yes, a buyer can pay against a proforma, especially for a deposit or advance. But it doesn't become a tax invoice by being paid, so the seller should still issue the proper invoice to record the sale correctly.
How do I write a proforma invoice?
Label it "PROFORMA INVOICE", add the seller and buyer details, a number, date, and validity date, list each item with quantity and unit price, show the RM total (and estimated SST where it applies), state the terms, and add a "not a tax invoice" note. Our free template does the layout for you.
Is a proforma invoice legally binding?
No. A proforma invoice is a preliminary document. It confirms the proposed terms but does not create a legal obligation to pay the way a real invoice does.
Is a proforma invoice the same as a tax invoice?
No. A proforma cannot account for SST or support a tax claim. In Malaysia, the proper tax document is the e-invoice you issue once the sale is confirmed.
Who prepares a proforma invoice?
The seller prepares and sends it to the buyer, before the sale is finalised.