Adaeze sells wholesale fabric from her warehouse in Apapa, Lagos. Most of her buyers are market traders who need to show a document to their bank before they can release funds from a trade loan. The bank will not release money against a regular invoice — they need a proforma.
Adaeze had been sending her buyers a typed Word document labelled "Quote" and they kept bringing it back with complaints. The bank wanted something that looked like an invoice. Her accountant told her to start issuing proforma invoices.
If you have ever been in this situation — or if a customer has asked you for a proforma and you were not sure what to give them — this guide explains exactly what a proforma invoice is, when to use one, and what it legally means for your business.
A proforma invoice is a preliminary bill sent before goods or services are delivered. It tells the buyer:
The critical distinction: a proforma invoice is not a tax invoice. It does not create a legal obligation to pay and cannot be used to claim input VAT. Under the Nigeria Tax Act 2025, only a tax invoice — issued after a taxable supply — is the document that triggers VAT obligations.
The most important rule: Never label a proforma invoice as "Invoice" or "Tax Invoice." Use "Proforma Invoice" or "PRO" as the reference prefix. Mislabelling a proforma as a tax invoice creates a VAT liability you may not intend.
Adaeze's buyers need a proforma to show their freight forwarder and bank exactly what is being purchased, the value, and the shipping terms. Customs agents use it to estimate import duties before the goods arrive. The real invoice comes after delivery.
If you require a deposit before starting work or shipping goods, send a proforma first. The buyer uses it to raise internal approval and process the payment. Once the deposit arrives and work is complete, you issue the proper tax invoice.
When you sell to a buyer in another country, they need a proforma to open a Letter of Credit or arrange international payment. The proforma shows price, quantity, and delivery terms (Incoterms) so their bank can calculate the currency equivalent and release funds.
Some procurement processes require a formal proforma before awarding a contract. Government ministries and large companies often have a standard form — but where they do not specify, a proforma invoice is the accepted commercial document.
A customer wants to reserve inventory at today's price while waiting for budget approval. A proforma locks in the agreed price for an agreed period — typically 30 days — without creating a booking entry in your accounts.
A proforma invoice should look very similar to a regular invoice, with two differences:
① It must be clearly labelled "PROFORMA INVOICE" at the top — not "Invoice" or "Tax Invoice"
② It must carry a validity clause — typically 30 days from the issue date
Beyond that, include the same fields as a standard invoice:
A proforma does not trigger a VAT obligation on its own. VAT is triggered at the point of supply — when goods are delivered or services are rendered. The proforma simply shows what the VAT will be once supply happens.
Exception: if payment is made against the proforma (advance payment or full payment upfront), the VAT point moves to the date of payment. At that point, you must issue a proper tax invoice to the buyer so they can claim input VAT credit.
If your business is registered for VAT (turnover above ₦100M), include the 7.5% VAT figure on your proforma so the buyer can budget for it. If you are below the ₦100M VAT threshold, your proforma should not show a VAT line — add a note: "VAT not applicable — not registered."
Here is a common sequence for Adaeze's fabric business:
① Customer requests a quote — Adaeze prepares a proforma invoice (PRO-2026-0012) for 50 rolls of Holland wax fabric, valid 30 days, 50% advance required.
② Customer uses proforma to raise internal approval — their accounts department approves the purchase and processes the advance payment.
③ Advance payment received — Adaeze ships the fabric.
④ Full payment received on delivery — Adaeze issues the proper tax invoice (INV-2026-0088) for the full amount, referencing the proforma number in the notes.
⑤ Proforma is filed, not booked — the proforma does not appear in her accounts receivable. Only the tax invoice (INV-2026-0088) creates the accounting entry.
Lucrive supports proforma invoices on all plans — free, Professional, and Enterprise.
When creating an invoice, select "Proforma Invoice" from the type dropdown at the top of the form. Lucrive will:
The proforma uses the same form as a regular invoice — same line items, same VAT calculation, same customer details — so switching between types is a one-click change.
Once the goods are delivered and you are ready to bill the customer formally, create a new invoice, select "Invoice" type, and reference the proforma number in the notes field.
A proforma sits between an informal quote and a tax invoice. Use it when the buyer needs a more formal document than a quote but you have not yet delivered the goods or services.
Mistake 1: Booking a proforma in your accounts
A proforma is not income. Do not record it as revenue or accounts receivable. Only book the tax invoice.
Mistake 2: Forgetting to convert
Some business owners send a proforma, collect payment, and never issue the proper tax invoice. This means the buyer cannot claim VAT credit and your records do not match what actually happened.
Mistake 3: Using a proforma as a receipt
A proforma is a pre-delivery document. Once money changes hands, issue a proper tax invoice — or at minimum a receipt.
Mistake 4: Wrong validity period
If a proforma has no validity date and prices change, you have a dispute. Always include "Valid until: [date]." Lucrive sets 30 days automatically.
A proforma invoice is a formal, pre-delivery price commitment used for customs clearance, advance payment requests, export transactions, and procurement approvals. It looks like an invoice but does not create a VAT or payment obligation. The tax invoice comes after delivery.
Adaeze now issues proformas in Lucrive for every wholesale order that requires bank financing or customs documentation. Her buyers get what they need, her accounts stay clean, and she has stopped dealing with returned Word documents.
If you want to understand the full invoice workflow — from draft to payment — read the professional invoice guide for Nigerian businesses.
This article is for general information. Confirm current VAT rules and invoice requirements with your tax adviser or the Nigeria Revenue Service.
Create a proforma invoice for your next order on Lucrive — it takes the same time as a regular invoice.
Sources & further reading