Proforma invoice for advance payment: wording and what follows

Why buyers pay against a proforma

A buyer’s finance team will not release money on an email. They need a document with your full legal details, a number, the exact goods or services, the amount, the currency and the bank account to pay. Before the sale, that document is the proforma invoice. It also protects the buyer: it fixes what the deposit is for.

What the proforma must say

• The full order: lines, quantities, prices, currency and total, as if the whole sale were being invoiced.
• The deposit: percentage and amount, for example “30% advance: USD 11,019.00”.
• When the balance is due: before dispatch, on delivery, against shipping documents, or so many days after the invoice.
• Your bank details: account name, bank, account number or IBAN, SWIFT, or local details such as IFSC in India.
• When work or production starts: “Production starts on receipt of the advance.”
• What happens if the order is cancelled after payment.
• The validity of the offer.

Sample wording

Adapt these lines to your own terms:

• “Payment terms: 30% advance (USD 11,019.00) by bank transfer on acceptance of this proforma invoice; balance of 70% (USD 25,711.00) against copy of the bill of lading.”
• “Delivery: 21 days from receipt of the advance.”
• “This proforma invoice is valid until 14 November 2026. Prices are firm for orders confirmed with payment of the advance within this period.”
• “The advance will be deducted from the final invoice.”

When the deposit arrives

1. Check the amount and the payer against the proforma number given as payment reference.
2. Confirm it with a receipt: date, amount, method, reference, and the proforma or invoice it relates to.
3. Apply your tax rules on advances. In some countries a payment received before the supply already creates a tax point and calls for an invoice or a voucher for the advance; in others tax waits for the delivery. See below.
4. Issue the final invoice when you deliver, showing the full amount, the advance already received and the balance due.

In InvoiceProforma, you turn the accepted proforma into the invoice in one click, then record each payment as a receipt linked to that invoice, with its method and reference. The invoice PDF shows what has been paid and the balance due.

Tax on advance payments

Whether tax is due when you receive a deposit depends on your country’s rules on the “time of supply” or “tax point”. In many VAT systems, a payment received before the supply creates a tax point for the amount received. Check your own rules with a tax adviser before relying on a general answer.

India. A registered supplier must issue a receipt voucher for every advance received (section 31(3)(d) of the CGST Act; contents in rule 50 of the CGST Rules). For goods, most suppliers do not pay GST at the time of the advance, under Notification 66/2017-Central Tax as amended; GST is then due on the invoice. For services, GST is due on the advance. Details on our India page.

Everywhere. The proforma itself never makes tax due. It is the payment, or the invoice, that may.