A quotation is for negotiating price. A PI is proof of a deal. Different purposes — mix them up and problems will follow.
How a Quotation and a PI Differ
| Item | Quotation | Proforma Invoice (PI) |
|---|---|---|
| Purpose | Quoting, comparing prices | Confirming the order; buyer pays against it |
| Nature | An offer of intent, revocable | An informal invoice; often attached to the contract after the deal |
| Used for customs clearance | Generally not | Accepted for clearance in some countries |
| Validity | States the quotation validity period | States validity and payment deadline |
| Signature required | Generally not signed | Usually signed and stamped by both parties |
What a Quotation Must Include
Header: company name, address, contact details.
Quotation date and validity period. Omit the validity period and you are the easiest target for price dragging.
Product: name, model, specifications; images optional.
Price: unit price, currency, trade term (including version and place).
Quantity tiers and MOQ, lead time, packaging method, payment method.
Remarks: exchange rate fluctuations, surcharges, whether tax is included — all subject to live quotations.
What a PI Must Include
PI number and date, so both sides can match the order.
Full details of buyer and seller, including full company name and address.
Product details: name, model, quantity, unit price, total amount.
Trade term and destination (or port of destination).
Payment method and corporate receiving account details.
Lead time and port of loading, plus bank details: receiving bank, account number, SWIFT.
Validity period and signatures and stamps of both parties.
How a PI Differs from a Commercial Invoice
A PI is not an invoice in the tax sense and cannot serve as a bookkeeping voucher.
Its role is to let the buyer arrange payment against it, or take it to a bank to apply for a letter of credit.
After the goods are actually shipped, the seller issues a commercial invoice, which serves as the basis for settlement and customs declaration.
So the amount and quantity on the PI must match the later commercial invoice. If they do not, the buyer will have trouble reconciling.
Three Things a Quote Must State Clearly
The trade term with version and place, e.g. "CIF Los Angeles, Incoterms 2020".
The quotation validity period, down to the exact date.
Whether exchange rate and duties are included. If not, state that they are charged separately.
Quantity tiers and MOQ must also be stated, so customers do not negotiate below the minimum order quantity.
Four Common Pitfalls
No validity period on the quotation — a customer orders six months later at the old price.
PI amount inconsistent with the contract, causing problems later with foreign exchange collection and verification.
Receiving account listed as a personal account — the buyer's compliance review will not pass.
Quoting only a unit price without a trade term is as good as no quote at all; the customer has nothing to compare.
