Proforma invoice

What it means

A proforma invoice is a request for payment before supply. It is neither a tax document nor an accounting document: it is not posted, does not enter the VAT records and creates no right to deduct.

In practice it serves as the basis for prepayment - it shows the amount, the bank account and the payment reference, but not the tax particulars of a proper invoice.

Beyond domestic prepayment, a proforma has one more use. For a shipment to a non-EU country with no sale behind it, such as samples or goods sent for repair, it documents the value and nature of the goods for customs clearance. Even then it is not a sales invoice and no receivable arises from it.

How it works in practice

Once payment arrives, a VAT payer has a tax point on the advance received and must issue a tax document - in Slovak practice an advance invoice or a document for the payment received. After delivery a final invoice settles the advance.

For a new customer, payment against a proforma is the simplest risk control: nothing ships until the money lands, which removes both payment terms and collection from the equation.

For clients who work with proformas we set a simple rule: the proforma is not sent to the bookkeeping; the payment on the bank statement and the tax document for it are. Unpaid proformas are tracked in the invoicing tool as requests, so the sub-ledger carries no receivables that never existed.

What to watch out for

Confusing a proforma with an advance invoice is common and has a tax effect: an advance received without a tax document being issued is undeclared tax, even though the company "invoiced nothing". The customer, for its part, cannot deduct from a proforma - it needs a tax document.

When a customer books a proforma as a payable and later books the final invoice as well, the debt sits in the books twice. With batch payment runs it is easy to pay twice, and getting the overpayment back from the supplier takes weeks. A paid proforma is therefore recorded as an advance paid, and the final invoice is settled against it.