Proforma Invoice (PI) is a must document for Letter of Credit.
This document provides information regarding goods/services quantity, price, delivery, buyer and seller information, and other details.
Proforma Invoice is issued by the seller to the buyer. It should provide sufficient information to the buyer to open the Letter of Credit.
PI is also required if the buyer needs an Import Permit (IP) for opening LC of any specific goods/services.
Bank uses this Proforma Invoice to get the seller (exporter) information and collect the credit report (as regulation of Central bank).
Contents in Proforma Invoice (PI)
As I mentioned earlier, it should provide sufficient information to open the LC. This are the information that should be included in the PI:
- Seller information (Company name, address, contact)
- Buyer information (company name, address, contact)
- Proforma Invoice number
- Date (issue)
- Goods/service name/description
- Goods/service qty.
- Unit price
- Total price
- Delivery period
- Payment term
- Sales/price term
- Bank detail of seller
- Validity of PI
- HS code
- Country of origin
- Port of loading
- Port of discharge
Additional information may be present. Proforma Invoice is issued on the letterhead of the seller and has their signature on it.
Example of Proforma Invoice
Here’s the one Proforma Invoice.
Proforma Invoice in the LC
In F45A (Description of Goods and/or Services) along with Goods description, Proforma Invoice number and date is mentioned.
Difference between Commercial Invoice and Proforma Invoice in LC
You already knew about Proforma Invoice. This is issued by the buyer before opening the LC.
Whereas Commercial Invoice is another document that is issued after shipment of goods. It’s a mandatory document for negotiation in the letter of credit. So it’s listed in 46A (Documents required).
Proforma Invoice is based on agreed qty. as per contract. But in actual, the shipment quantity may vary as there’s tolerance allowed in the LC.
In the Commercial Invoice actual shipment qty. and value is mentioned.
Both Proforma Invoice and Commercial Invoice is presented but one cannot alter the other.