Negotiating an Export Sales Agreement with a Pro Forma Invoice

A sale to a new foreign
buyer often begins with an inquiry followed by
a request for a price quote. Once you have established that
there is genuine interest, the next step is to
create a pro forma invoice for the potential buyer. It’s the preferred method for
doing international business. A pro forma invoice
provides more information than a domestic quote in order to address the unique
aspects of foreign sales. Created in the style of a
typical commercial invoice, the pro forma invoice
allows you and the buyer to understand each other clearly
and negotiate the terms of sale. As you create the
pro forma invoice, carefully consider your
pricing strategy and level of risk for the shipment. Additionally, the buyer may
also require a pro forma invoice to apply for an import license,
open a letter of credit, or purchase another currency. Once finalized, the pro forma
invoice will be the basis for the commercial invoice,
which is the final bill of sale. In this video, you’ll
learn how to negotiate and fulfill a successful
export transaction with these key international
sales documents. The first and most
important step when crafting your document,
is to mark it clearly as “Pro Forma Invoice.” This will clarify that the
terms of sale are not final. A pro forma invoice typically
contains the following elements: Contact details for you and the
buyer The specific time period for which the quote
is valid (such as 30 days). The price and currency
of the quote. The method of payment (such
as Cash on Delivery or Letter of Credit). A detailed description of the
product including dimensions and weight of the
items when packed for shipment. The shipping date
and delivery point. And the terms of sale, either with
a generic term or an Incoterm. A term of sale specifies who
is responsible for paying for and managing the shipment,
insurance, documentation, customs clearance, and
other logistical activities. You can use Incoterms,
which are internationally recognized terms. You can learn more about
them on Other items that should appear on a pro forma invoice include
other additional charges, such as: special documents,
legalization required for documents, inspection
and/or certification fees, pre-shipment inspections, and
special packaging and labeling. It’s also good practice to
include the following statements where applicable: Please
advise of any special documents or standards required to
clear customs in your country, as this might affect
our shipping date. The country of origin for the
goods is the United States (or another country if applicable). The pro forma invoice
is true and correct. Finally, have a responsible
person in your company sign
the document. The pro forma invoice can be
a useful tool in the process of negotiating a sale. It’s a good idea to communicate
often with the foreign buyer in the earliest stages
of a transaction. Find out if there
are special documents or regulatory compliance
requirements of the foreign country. There could be costly
problems and delays if you don’t know up front. Ask if a shipping
date is required. If so, check if your
company can meet it. Finally, understand the scope
of your insurance coverage in case something happens
before the buyer has received the goods. As you prepare to export your
product, the next step is to prepare the commercial
invoice for the shipment. The commercial invoice is a
legal document between a seller and buyer describing
the goods and price. It’s a key document
for customs clearance and determining customs duties. When preparing the
commercial invoice, include the same details
from your pro forma invoice. You can find samples
and more information about these documents
on Beginning with a carefully
crafted pro forma invoice and finalized with a
commercial invoice, you and a foreign buyer can
agree on a price and terms that will help to ensure full
satisfaction to both parties. For more information
on exporting, check out the articles
and videos on You can also contact your local
U.S. Commercial Service office.

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