Pro-Forma Invoice - still in the pipeline?

the request for a Pro-Forma Invoice has been raised in several threads already and has also been promised for months. I still cannot find the Pro-Forma Invoice tab and we really use this quite a lot in our company. When will this functionality be added? It would be greatly appreciated.
Thanks for a superb software.

I still don’t have full understanding of this feature. Currently I have two ways to implement this.

One way is to add new tab dedicated to pro-forma invoices. Another way is to simply add checkbox on invoices which could indicate the invoice is “pro-forma”. When customer approves pro-forma invoice, the invoice should be edited and “pro-forma” checkbox should be unchecked.

The question is, do pro-forma invoices have their own reference number sequence? Or is it required that pro-forma invoice reference number and eventual invoice reference number must be the same.

I would appreciate if the Pro-Forma invoice had an own tab with own reference number sequence. Pro-Forma invoices should not be booked in the system as done transaction, they rather behave like a Quote. The problem is if we issue invoices then we have to pay VAT on that invoice amount and if the client does not pay then we have to make a journal entry with a bad debt. If we could issue a Pro-Forma invoice then this transaction has not actually happened in the books until the client has paid and only once payment is received we would convert the Pro-Forma invoice to the real Invoice.

I am not sure how other people feel about this.

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that is perfect …

Just to add that
payments under proforma invoices are registered to the balance of the customer.

also here is an example from our work:

customer has confirm us to load a vessel. the vessel capacity is 1000mt. the agreement with the client is 90% payment is done upon confirmation of the vessel and the balance paid later against final invoice.

so the customer prepays the 90% (for the favor of the example) 90 000 . This amount is register in the balance of the customer. the total value of the goods loaded on the vessel, is 110 000.
Final invoice is issued by taking in mind the total value of the goods mines payment of the customer against the proforma for the particular vessel.

prepayments for goods vary in percentage from 50% - 110% . and in loading bulk cargo is never easy to calculate correct load amount of the goods in the vessel. that is why proforma comes in use. Also because is a document the customer can present in the bank and make the payment.

@Lubos

I believe either would work because ultimately the pro formas are not getting logged into system and are meant as a receipt for prepayment only.so their ordering numbers whether in sequence or as per corresponding invoices would both be fine.

But for simpler management, I too believe it’s better to have different tabs. We don’t want the added hassle of making sure all invoices are checked / converted from pro forma.

@azampas

While the point you are making on how Pro forma invoices are used, is correct , I am just trying to restate your example just to make sure it is clearer, as I got a little confused reading it.

Like you perfectly said, Proformas are submitted to clients in order to make prepayments - sometimes a percentage of the Quotation agreed upon (90% of $100,000, in your example). .

However, the amount paid - $90,000 would be recorded against the Invoice. Proforma is not logged into the system for accounting…it is only meant as a document to submit to a client for pre payment.

Now, when goods are delivered, the Invoice raised would show total amount as $100,000, with $90,000 as payment received and remaining $10,000 as pending payment.

Lubos - hope this is all clear to you.

We are looking forward to this welcome addition to Manager.

i believe we can rename sales orders tab to proforma and half of the issue is solved

for me, i need the payments for proformas to be registered and brought up as balance for the final invoice of the customer. so a check box that proforma is paid may be required…
also our auditor asks the proformas issued to compare with bank statements (incoming payments)

I’m still not convinced separate tab is a way to go. Pro-forma invoice is basically a sales invoice without affecting accounts receivable.

Why not have a checkbox on invoices to indicate the invoice is “Pro-forma”.

This way you wouldn’t have to convert pro-forma invoice into real invoice. Merely receiving a payment against pro-forma invoice would automatically convert it into an invoice. Wouldn’t this workflow be the best way?

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I would like that as long as the check box would alter / enable the title to say “Pro-forma Invoice”.

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Pro-forma invoice is basically a sales invoice without affecting accounts receivable BUT affects bank, customer balance and customer statements.

Also the numbering in proforma invoices differs from normal invoicing because not all auditors are smart enough to separate the two (speaking with experience for our auditor)

So to sum up my point:
Proforma is used for prepayment from the customer;
Proforma affects :

  1. Customer Transactions
  2. Customer Balance
  3. Bank Balance

Hope this is helpfull

@azampas: In the scenarios that I have worked in the last 2 or 3 jobs, or even now as a company that I run myself- proforma invoice dont affect accounts at all.
Pro forma invoice is used to submit to client for him to raise a Pre Payment from his finance…but once we receive a payment, we actually create an Invoice, and take the payment through an invoice (for example say a 40% advance). the invoice will then show 40% paid and 60% as balance amount.

The reasoning behind this is…sometimes Client may take a proforma invoice, but not finally pull through with the payment.
So traditionally Pro forma invoice has to be a document that doesnt affect banks or customer balance or customer statements or accounts in any way. At least that is what I require in my business model.

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@lubos

This would work provided the Proforma invoice says “Proforma Invoice” while the box is checked (for purposes of printing and submitting so that Client’s finance is aware what the document is). . And once box is Unchecked or payment is received, it converts into Invoice and says only “Invoice”

so you mean that if your customer makes prepayment throught proforma and he asks you also for his statement this prepayment will not be registered? this is how i mean that it affects the customer balance and statement (and subsequently the bank account)

The proforma as per ce may not be "registered " in journal entries as a normal invoice, but still you need the record to cross-reference with payments received

It seems to me, reading this thread, that what various users are referring to as “pro-forma invoices” are nothing more than sales quotes. Others might call them proposals. Still others might call them offers. From an accounting standpoint, they create no obligation for the customer to pay. They only list goods and services that will be delivered in the future. Thus, no revenue has actually been earned, so there should be no impact on accounts receivable or income accounts.

When payment is received in advance of delivery for goods or services against a sales quote or pro-forma invoice, it can be allocated to Customer credits, and all will be well from the accounting perspective. When the income is actually earned by delivery of the goods or services, a sales invoice should be raised, thereby creating the account receivable and increasing the appropriate income account. Manager will automatically apply the customer’s credit balance to the invoice and show any remaining balance due.

So I don’t see anything being requested that the Sales Quotes tab doesn’t already provide, except that individual users have personal preferences about serialization, document titles, or reference numbers. It would be impossible to accommodate every option a single user might like for such things. Numbering can already be manually entered or overwritten in Manager, reducing that issue somewhat. Specific titles will be handled when the promised ability to customize all documents is released.

I might also observe that some contributors seem to be describing some unusual accounting workflows. Expecting Manager’s development to match protocols that are not widely accepted will probably lead to disappointment.

OK, not sure whether this will be permanent solution but from now on it’s possible to rename headers on individual sales quotes. The main reason why I have introduced this feature is because some users have been asking to show quotes as “Bids”, “Estimates” etc. And since sales quotes behave the same as pro-forma invoices from accounting point of view, nothing is stopping you to simply call certain quotes “Pro-forma invoices”

To rename header on quote, there is a checkbox called Custom header at the bottom of sales quote form.

Then sales quote will show as:

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This is already a great help. Thank you so much.

Version 15.6.88 now gives the option of changing sales quotes to Estimate, Bid, Pro-forma invoice and whatever

A proforma invoice is not a sales quote or proposal. In it’s true form it is also not a pre-payment where GST or VAT may be applied. A proforma invoice is a request for a deposit payment against goods and/or services that are to be supplied in the future - where unlike a pre-payment no GST is applied to the proforma

Revenue received for payment of a proforma invoice is accounted in the chart of accounts as advanced deposit (liability) - does not affect the P&L until it is journaled into income when the service or goods are provided - it will appear in the balance sheet as a liability. It is journaled onto the clients account when the goods or service is provided to ‘cash off’ or reduce the amount of the client account or it may be re-funded or absorbed if the service is not provided - depends on the terms and conditions. Quite a number of invoices for my business when I am purchasing accommodation rooms is invoiced with a Proforma - it allows for multiple changes In and Out dates, additions, deletions in rooms etc without affecting the GST. The GST is not applied until the person checks out

I think it would be a mistake to check a box to change the pro-forma to an tax invoice - the date of the proforma might be in a different BAS (tax) period - the two need to be completely separate in my opinion - makes the process 1000 easier.

For me the ability to change the title to proforma works 100% for me, i am not under fire to add tax and whatever to the pro-forma, i could edit and add the tax and whatever when i copy it to invoice or order. Deferring revenue from a proforma invoice is a waste of time to me, why issue a proforma for revenue received in advance? Use customer credit to receive advance payments and when you finally deliver the goods or services, raise an invoice to exhaust the deposit/customer credit/Deferred revenue. The reverse is true for purchases, use supplier credits.

I don’t agree with the idea that a proforma invoice should cause a debit and credit entry in the books. it should just be a record.