A sale to a new buyer starts with an inquiry followed by a request for a price quote. Once you have established that there is a general interest the next step is to create a pro forma invoice for the potential buyer. Proforma is the preferred method of doing international business. A pro- forma invoice provides more information than the domestic quote in order to address the unique aspect of a foreign sale. Created as a file of a commercial invoice, the proforma invoice allows you and the buyer to understand each other clearly and negotiate the terms of sale. As you create the proforma invoice, carefully consider the pricing strategy, level of risk for the shipment. Additionally, the buyer may also require a proforma invoice to apply for an import license, open a letter of credit and purchase another currency. Once finalized, the proforma invoice will be the basis for the commercial invoice.   

Elements of a proforma invoice are:

• Contact details for the seller and the buyer
• The time period for which the quality is valid
• The price and the currency of the quote
• The method of payment such as cash on delivery or letter of credit
• Detail description of the product
• Shipping date and delivery point of the product
• Terms of sales either with the generic term or an incoterm

A term of sale specifies who is paying and managing shipment, insurance, documentation, customs clearance and other logistical activities.

Other items that should appear in a proforma invoice are additional chargers which entail, special; documentation, legalization required for documents, inspection and/or certification fees, pre-shipment inspections and special packaging labels.

It is also good practice to include the following details.

• Please advise of any special document or standards required to clear customs in your country, as this might affect our shipping date
• The country of origin for the goods is the United States (or another country if applicable).
• The pro forma invoice is true and correct.

Finally have a responsible person in your company to sign documents. 

The proforma invoice can be a useful tool in the process of negotiating a sale.  It is good to communicate with the foreign buyer in the earliest stages of transactions. Find out if there is any special documents or regulatory compliance requirements of the foreign country. There could be custom troubles in delay if you don’t know upfront.

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