What Is a Proforma Invoice? A Guide for South African Small Businesses

You've quoted a client, they've said yes, and now they're asking you to send a proforma before they can pay the deposit or get approval on their end… Or, maybe you're the one asking your supplier for a proforma before you commit to a large order. Either way, it's a document that comes up all the time in trading goods and services - but what is it?

This guide explains what a proforma invoice is, what to put on it, and how it differs from a regular invoice and a SARS tax invoice.

What is a proforma invoice?

A proforma invoice is a document you send before any money is paid or work begins. It tells your customer what you're going to do, how much it will cost, and what the terms are - but it isn't a request for payment yet, and it doesn't count as an official SARS document. The easiest way to think about it is as a quote that's been formatted to look like an invoice. Once the work is done or the goods are delivered, you replace it with a proper invoice.

What a proforma invoice is not:

It's worth knowing what a proforma invoice can't do, because this is where a lot of confusion happens:

It's not a tax invoice, which means your customer can't use it to claim back their VAT

It's not a contract, even though it includes what you've agreed on

It's not a final bill, even if your customer pays a deposit based on it

It's not recorded as a sale until you issue the actual invoice

Once the work is done or the goods are delivered, the proforma gets replaced by an official invoice - or a tax invoice if you're VAT-registered. It doesn't get updated or converted - it gets replaced.

When to use a proforma invoice

Confirming a quote with a business customer

When you're selling to another business, the person you're dealing with often can't just say yes on the spot. They may need approval from a manager or confirmation that the budget is there before they can commit. A proforma invoice gives them something clear and detailed to take to the right person - it shows exactly what they're agreeing to, at what price, and on what terms.

Securing a deposit before starting work

If you're a tradesperson, event planner, caterer, custom maker, or contractor, you've probably started a job before receiving any payment - and then had to chase for it afterwards. A proforma invoice is how you request a deposit upfront - it shows the full cost, what the deposit covers, and what the customer can expect. This is one of the most practical ways to protect your cash flow before a job begins. Read more about how invoicing affects your cash flow.

Custom orders and large items

When a product needs to be made to order, sourced specially, or imported, it makes sense to get the customer's commitment before you spend money on their behalf. A proforma invoice lets them confirm the cost and how long it will take before you go ahead, and gives you something to refer back to if there's a question later.

International or cross-border transactions

For businesses that import or export goods, a proforma invoice is often required by freight companies, customs authorities, or banks before a shipment can move. If you work with international suppliers or customers, you'll likely come across this use of proforma invoices.

Invoice vs proforma invoice: what's the difference?

The main difference between an invoice and a proforma invoice is simple: a proforma goes out before the work is done or the goods are delivered. A standard invoice goes out after. One is an offer. The other is a bill.

Here's a quick comparison:

One thing worth keeping in mind: if a customer pays you a deposit based on a proforma, that payment doesn't replace the invoice. Once the work is done or the goods are delivered, you still need to send the proper document.

Proforma invoice vs tax invoice in South Africa

In South Africa, the difference between a proforma invoice and a tax invoice matters because SARS has specific requirements around tax invoices that a proforma simply doesn't meet.

A proforma invoice is sent before the sale. Once the work is done or the goods have been delivered, a VAT-registered business must issue a proper tax invoice within 21 days. That's the document your customer needs to claim back their VAT - a proforma invoice can't be used for this, no matter how it's worded or formatted.

For the latest VAT registration thresholds and what they mean for your business, read our summary of the 2026 VAT and turnover tax threshold changes.

Why this matters for SARS:

If a customer pays you based on a proforma, there are still two things that need to happen. First, you need to issue a proper tax invoice once the work is done - without it, your customer can't claim their VAT back, and the sale won't be properly recorded on your side either. Second, SARS requires you to keep tax invoices - both the ones you issue and the ones you receive - for at least five years. A proforma doesn't cover that. The tax invoice is the one that counts here!

What to include in a proforma invoice

A proforma invoice should give the customer enough detail to make a decision, and it needs to be clearly labelled so there's no confusion about what it is. Here's what to include:

• The words "Proforma Invoice" clearly at the top, ideally with a note that says "This is not a tax invoice"
• The date the document was issued
• A validity period - typically 30 days, after which the prices may change
• Your business name, address, and contact details
• Your VAT registration number if you are VAT-registered
• Your customer's name and contact details
• A description of each product or service, including quantities and unit prices
• A subtotal
• An estimated VAT amount if applicable
• A total
• Payment terms, including any deposit required and when the balance is due

When your proforma has all of this, your customer can make a decision with confidence - and you have a clear record of what was agreed.

Things to check before you send

A few things worth going over before a proforma invoice goes out:

• Labelling it just "Invoice" - if the word "Proforma" isn't clearly there, your customer may treat it as a final bill, and SARS may treat it as a tax invoice.
• Using the same numbering as your tax invoices - proforma invoices should have their own separate numbering sequence so there's no confusion in your records.
• Forgetting the validity period - without a validity period, your customer could come back three months later expecting the same price.
• Missing the VAT estimate - if you're VAT-registered, your customer needs to see an estimated VAT amount so they can budget correctly.
• Treating it as the final invoice once paid - a deposit payment based on a proforma doesn't replace the tax invoice. Once the work is done, remember that you still need to issue the proper document.

How to issue a proforma invoice

Once you have a template in place, sending a proforma invoice is a quick process.

The most important thing is that your proforma looks different from your tax invoice - a different header, different numbering, and the words "Proforma Invoice" clearly at the top. That way there's no confusion in your records or your customer's.

Keep your proforma numbering separate from your tax invoices. A simple way to do this is to use a "PI" prefix - PI-001, PI-002 - while your tax invoices follow their own separate sequence.

Once the work is done or the goods are delivered, send the proper tax invoice as soon as you can. The 21-day rule applies from the date of delivery, so it's worth making this part of your regular process.

If you'd like to manage your invoicing digitally, iK Invoice is one option SA small businesses use to send invoices and get paid faster. Read more about how to get paid like a pro with iK Invoice.

Manual templates vs digital tools

A Word or Excel template is a good place to start, especially when you're not sending many documents yet. As your business grows and you're sending more invoices, a digital tool can help you keep track of what's been sent, what's still outstanding, and what needs following up. It's less about the tool and more about having a system that works for you.

Getting your invoicing flow right in your business

A proforma invoice is a simple document that does a useful job. It gives your customer something clear to work with before they commit, helps you get deposits paid before the work begins, and means both sides know what's been agreed from the start.

For more on managing your business finances day to day, read 8 Money Management Tips to Boost Your Business.