What is PI in foreign trade?
Definition and Function of PI
The emergence of pro forma invoices solves the problem of information asymmetry in foreign trade transactions. Through PI, the seller can show the buyer key information such as product price, specifications, payment terms. And transportation methods in advance, and the buyer can also further confirm the order details through this document to ensure the smooth progress of the transaction.
The difference between pro forma invoice and commercial invoice
Although pro forma invoices and commercial invoices are similar in appearance and content, their functions and legal status are completely different:
- Different uses
- PI proforma invoice is mainly used for quotation, order confirmation or letter of credit application and is an informal document.
- CI commercial invoice is the official document for customs clearance and payment and has legal effect.
Purpose and scenarios of PI proforma invoice
The role of PI in international tradeThe main uses of PI proforma invoice include the following aspects:
- Initial Quotation
In the early stages of a transaction, the seller provides the buyer with an initial quotation through PI to help the buyer markup and margin: key differences and how to calculate understand the product price and transaction terms. This approach can improve the professionalism and formality of the quotation. - Order Confirmation
Buyers and sellers confirm order details, including quantity, price, delivery time, etc. through PI, so as to avoid unnecessary disputes in subsequent transactions. - Apply for Letter of Credit
The buyer can apply to the bank to open a letter of credit (L/C) based on the PI to ensure the security of the transaction.
How to use pro forma invoice for order confirmation and letter of credit application
- Used for order confirmation
In the foreign trade process, the buyer and seller confirm the transaction details through the PI proforma invoice, including price, payment marketing campaigns benefits for a business and steps to follow terms, delivery date, etc. After the seller issues the PI, the buyer signs and confirms, and this process is regarded as the formal confirmation step of the transaction. - For letter of credit application
After receiving the PI. The buyer usually needs to submit it to the bank for review as the basic document for applying for a letter of credit (L/C). The clear transaction information in the PI can help. The bank formulate the terms of the letter of credit and ensure that the letter of credit is consistent with the order requirements.
How to do PI?
The preparation of PI proforma invoice is a job that requires great attention to detail, because it is not only a tool for communication between buyers lithuania phone number and sellers, but also an important part of the foreign trade process. When preparing PI. You should ensure that all information is accurate to avoid problems in subsequent transactions.
Steps to prepare a pro forma invoice
1. Determine basic transaction information
Before making PI, the seller needs to clarify the basic information of the transaction with the buyer, including product name. Specifications, forma invoice quantity. Unit price, total amount, delivery time and transportation method, etc. This information will serve as important content of the invoice.
2. Use standard templates
Most companies use a standardized PI template to ensure that the document structure is clear and avoid missing key information.