Pro Forma Invoice Template: A Negotiating Instrument
Posted on April 25, 2010 | No Comments
John M Van asked:
For any business transaction there are two parties: seller and buyer. Many times a situation comes when seller charges more than market price where he has to convince the buyer to avail his service despite higher payment charges. To convince the buyer, the seller has to send detailed payment details for his product which helps buyer to figure out the high pricing of seller.
Pro Forma invoice template is a negotiable instrument for finalizing a deal. This template is made when deal is not confirmed from buyer side but all details have been sent by the seller. Pro forma invoice is not a liability of buyer to pay but an information guide towards his deal with seller. There are many advantages of sending Pro Forma invoice template to buyer. Sending the template will help seller to inform his buyer about his conditions of the deal like:
- What will be the credit policy for buyer?
- What will be the time required to supply the product?
- What will be the transaction cost including all taxes?
- Which mode of payment will be acceptable?
- At the time of unavailability of products with seller, what action will be taken by him to fulfill the requirements of buyer?
Hence with the above discussion it can be concluded that this negotiable instrument can only be used for information purpose and cannot be used as a legal document. The reason that the template is not used as a legal document is that this invoice does not have any signatory provision and thus no one can be held responsible for the authenticity of the document. Pro Forma invoice is more than an advice from seller to buyer, informing him in writing that what will be present in the commercial invoice, which is next step after Pro Forma invoice.
Pro Forma invoice plays an important role not only in services and trading transactions but also when firms go for merger, acquisition, a new capital investment or selling a unit of the firm. This document helps the firm to find debt equity ration so that it can go for lucrative investment or disinvestment.
Kansieo.com
For any business transaction there are two parties: seller and buyer. Many times a situation comes when seller charges more than market price where he has to convince the buyer to avail his service despite higher payment charges. To convince the buyer, the seller has to send detailed payment details for his product which helps buyer to figure out the high pricing of seller.
Pro Forma invoice template is a negotiable instrument for finalizing a deal. This template is made when deal is not confirmed from buyer side but all details have been sent by the seller. Pro forma invoice is not a liability of buyer to pay but an information guide towards his deal with seller. There are many advantages of sending Pro Forma invoice template to buyer. Sending the template will help seller to inform his buyer about his conditions of the deal like:
- What will be the credit policy for buyer?
- What will be the time required to supply the product?
- What will be the transaction cost including all taxes?
- Which mode of payment will be acceptable?
- At the time of unavailability of products with seller, what action will be taken by him to fulfill the requirements of buyer?
Hence with the above discussion it can be concluded that this negotiable instrument can only be used for information purpose and cannot be used as a legal document. The reason that the template is not used as a legal document is that this invoice does not have any signatory provision and thus no one can be held responsible for the authenticity of the document. Pro Forma invoice is more than an advice from seller to buyer, informing him in writing that what will be present in the commercial invoice, which is next step after Pro Forma invoice.
Pro Forma invoice plays an important role not only in services and trading transactions but also when firms go for merger, acquisition, a new capital investment or selling a unit of the firm. This document helps the firm to find debt equity ration so that it can go for lucrative investment or disinvestment.
Kansieo.com