What are the differences between proforma invoice and purchase order?

Both proforma invoice and purchase order are commercial documents, which are used in international trade transactions.

In my previous articles, I have explained these two important documents in detail. If you want to learn more about them, please just click the links below.

  • What is a proforma invoice? How does it work?: In international trade, a proforma invoice can be defined as a type of commercial document, which is issued by the exporter in order to submit the terms and conditions of the sale in a written format to the importer's approval at the beginning of the transaction.

purchase order and proforma invoice differences in export and import business

Today, I would like to outline the differences between the proforma invoice and purchase order.

What are the differences between proforma invoice and purchase order?

Issuer of the Documents:
  • Proforma Invoice: Proforma invoice issued by the exporter and sent to importer's approval.
  • Purchase Order: Purchase order issued by the importer and sent to exporter's attention.
Delivery Terms:
  • Proforma Invoice: It is expected that CIF, CFR, CIP, CPT delivery terms more likely to require a proforma invoice than a purchase order, because according to these Incoterms sellers have to arrange and pay for the main carriage.
  • Purchase Order: Under EXW, FCA and FOB delivery terms, importers could issue purchase order more easily, because main carriage is arranged by the importers. Additionally, these Incoterms are preferred by professional, well-established importers, who tend to work with purchase orders.
Business Status:
  • Proforma Invoice: 1st time orders require a proforma invoice more than a purchase order, because importers may not be having full details of the transaction, including shipment details, to prepare a purchase order. 
  • Purchase Order: If exporter and importer have established a regular business relationship, meaning periodic shipments are in place from exporter to importer, then purchase order is more likely to be used instead of a proforma invoice.

Related Pages For Further Reading: