Hopefully, having put a lot of effort into marketing your product abroad, you will receive an enquiry from a potential foreign customer – the importer. The importer will almost certainly ask you to quote on a particular order which he/she will describe in some way (describing the the product in question, the number of units required, the destination, and providing other relevant information). Nevertheless, it is often the case that this information is insufficient for you to put together a complete quotation and you may need to go back to your potential customer to obtain all the information you need to compile a quotation. Once you have this information, you will then put together the quotation (or proforma invoice – see below) and send this back to the importer. If your offer is acceptable, the importer will come back to you with an order. More likely, however, is that the importer will come back to you asking for better terms and you will then go through a negotiation process before you come to some sort of agreement. Once this agreement has been reached and the importer accepts your final offer, you will supply him/her with a final quotation/proforma invoice hwich he/she will accept in writting or by issuing a letter of credit.
What is the difference between a proforma invoice and a quotation?
In reality, there is very little difference in function between the two and the proforma invoice is really a quotation in invoice form; in other words. the difference really comes about in terms of the structure and layout of the proforma invoice/quotation. A quotation appears more like a business letter describing a written offer, while a proforma invoice appears exactly the same as a invoice (except with the words “proforma invoice” written on the document). The proforma invoice essentially serves as a ‘quotation’ that sets the road to further negotiations. Some exporters choose to prepare an ‘official’ quotation, while others prefer to use the proforma invoice as their quotation. In fact, the quotation can contain the same information as a proforma invoice. We recommend that you consider using a proforma invoice as your official quotation, unless otherwise instructed by the importer.