The Difference Between Proforma Invoice and Account Sales

Proforma invoice and account sales are two accounting processes that businesses use to track their trade. Each is a type of sales ledger, which is a record of how much money the company has coming in and going out. Understanding the differences between these terms and their uses can help you keep your business records organized and efficient. Accounts sales let you track individual customers, assign them an account code for future reference, and set up automated reminders about outstanding invoices. The invoice form keeps track of the balance sheet so that businesses don’t oversell their services.

What is a Proforma Invoice?

A proforma invoice is a forecast of the sum that a business anticipates being paid by a customer. It is typically issued in advance of the conclusion of a business transaction, at which point it becomes an actual invoice. It’s critical to keep in mind that a proforma invoice is an estimate rather than a bill. When a customer places an order with a company, a proforma invoice is frequently generated. The inventory that will be sold to the customer by the company must be purchased. A proforma invoice will be sent to the customer after the company estimates the cost of the inventory. The pro forma invoice is given to the customer, who then has a certain amount of time to pay it.

What is Account Sales?

Account sales entail offering a good or service for a sum that won’t be payable until a future date. The documentation of that transaction is an account sales invoice. It contains the sum of money that the business anticipates getting from the client, how long the client has to pay it, and any discounts or fees that apply to the deal. You can prevent your company from having to add up sales from various types of transactions at the same time by keeping track of the money from your account sales. This can help you keep accurate records and make it simpler for you to quickly determine how much cash you have available at any given time.

Differences Between Proforma and Account Sales Invoice

1. Purpose

The main difference between proforma and account sales invoices is their purpose. A proforma invoice is an estimate of the amount that a client will pay, while an account sales invoice is the record of a sale that has already been made.

2. Timeframe

Another difference between the two is the timeframe involved. A proforma invoice is typically due a few days after the sale, while account sales invoices are paid according to a specific schedule.

3. Tiered Payment Options

Proforma invoices come with a standardized payment plan. An account sales invoice, on the other hand, can include tiered payment options that give the client more flexibility in when and how they pay.