Letter of credit shipment proforma invoice template
Letter of credit shipment proforma invoice template: goods worded for the credit, with inspection, freight and insurance on their own lines.
Templates by industry
- Combed cotton yarn Ne 30/1, 40 kg cones, 24 tonnes
- Pre-shipment inspection by an independent surveyor
- Ocean freight to the discharge port in the credit
- Marine insurance at 110% of the goods value
Preparation guide
Example workflow
Confirm goods and delivery terms
Example: confirm the quantity and unit price of "Combed cotton yarn Ne 30/1, 40 kg cones, 24 tonnes", then the delivery terms, transport and insurance.
Set the validity and send
Check every line down to "Marine insurance at 110% of the goods value", add the valid-until date and the prepayment account, and send the proforma to the buyer.
Invoice after payment or shipment
When the buyer pays or the goods ship, make the invoice from the proforma. The proforma stays unchanged as the offer the buyer accepted.
When an exporter is paid under a letter of credit, the buyer asks its bank to open the credit, and the proforma invoice is what the buyer hands over to describe the sale. Whatever it says about the goods, the quantity and the price usually ends up in the credit, and the exporter’s later documents are checked against that wording. Goods, inspection, freight and insurance are priced on separate lines, so that the credit can be opened for the right amount.
Fields to prepare
- Deliverables and line items
- Combed cotton yarn Ne 30/1, 40 kg cones, 24 tonnes, Pre-shipment inspection by an independent surveyor, Ocean freight to the discharge port in the credit, Marine insurance at 110% of the goods value: the goods or services and the quantities you intend to supply, at the prices you will invoice.
- Combed cotton yarn Ne 30/1, 40 kg cones, 24 tonnes
- Write quantity, unit and quality exactly as the buyer will have them in the credit, and add a tolerance such as “about 5%” only if both sides have agreed it.
- Pre-shipment inspection by an independent surveyor
- Say who inspects and what the certificate certifies; if the credit asks for an inspection certificate, the line must match that document’s title.
- Ocean freight to the discharge port in the credit
- Name the discharge port as the credit will, not a nearby city, and state whether freight is prepaid, as it is under CIF.
- Marine insurance at 110% of the goods value
- Cover of 110% of the goods value is a common requirement; show the percentage so the bank can see the insurance matches the credit.
- Delivery terms
- State the delivery terms (such as an Incoterm and the named place), how the goods travel and who insures them.
- Validity and prepayment
- Give the date the prices hold until and, if you ask for payment in advance, the account the buyer pays into.
- Scope to agree
- Word the goods line as the buyer will ask its bank to word it in the credit, and add the latest shipment date, the ports, the Incoterm and whether partial shipments are allowed.
Before sending
- Does “Combed cotton yarn Ne 30/1, 40 kg cones, 24 tonnes” match the buyer’s order in quantity, unit price and currency?
- Does “Pre-shipment inspection by an independent surveyor” need an HS code or country of origin in its description for the buyer’s import licence?
- Can “Ocean freight to the discharge port in the credit” ship in the quantity shown once the prepayment arrives?
Show 4 more
- Does “Marine insurance at 110% of the goods value” match the buyer’s order in quantity, unit price and currency?
- Check that quantities, unit prices and currency match what the buyer ordered or asked you to quote.
- Add the HS code and country of origin to the item descriptions if the buyer needs them for an import licence.
- Check the valid-until date, the delivery terms and the prepayment account, and that the document says it is not a tax invoice.
Worked example: 24 tonnes of yarn paid by letter of credit
The figures are an example, in dollars. A spinner offers 24 tonnes of combed cotton yarn CIF to a buyer abroad, who needs the proforma to ask its bank to open the credit. The lines are the yarn, the inspection, the ocean freight and the insurance; no tax is added on an export.
| Item | Quantity × unit price | Amount |
|---|---|---|
| Combed cotton yarn Ne 30/1, 40 kg cones, 24 tonnes | 24 × $3,850.00 | $92,400.00 |
| Pre-shipment inspection by an independent surveyor | 1 × $420.00 | $420.00 |
| Ocean freight to the discharge port in the credit | 1 × $1,650.00 | $1,650.00 |
| Marine insurance at 110% of the goods value | 1 × $305.00 | $305.00 |
| Total | $94,775.00 | |
The four lines come to $94,775.00, and with no tax the proforma total is $94,775.00. That is the amount the buyer asks its bank to open the credit for. If the credit arrives with another amount or another description, the proforma is corrected before the yarn is shipped.
Common mistakes on a letter of credit proforma
- Describing the goods more loosely or more fully than the buyer’s bank will in the credit, so the documents never match.
- Quoting FOB prices while expecting the credit to cover freight and insurance as well.
- Leaving out the latest shipment date, so the credit opens with a date the mill cannot meet.
- Accepting a credit that differs from the proforma instead of asking for an amendment.
- Folding the inspection fee into the yarn price although the credit asks for an inspection certificate as a separate paper.
What the document must show
These details make a proforma invoice easier to approve and to file.
- The seller's and the buyer's names and addresses
- Proforma number and issue date
- Each item with quantity and unit price; add the HS code and country of origin to the description if the import licence needs them
- Delivery terms (such as an Incoterm), transport and insurance
- Payment terms and the account for prepayment
- The date the proforma is valid until
- A statement that it is not a tax invoice
The sales tax depends on where the work is supplied, so set the rate that applies to your customer before sending.
Official rate reference: US government: state and local taxes
Frequently asked questions
What if the credit that arrives does not match the proforma?
Ask the buyer to have it amended before you ship. The bank pays against documents that follow the credit, not the proforma, so a difference in description, amount or date is easier to fix now than after the goods have sailed.
Can I put the credit number on the proforma?
Not at first, because the credit does not exist yet. Once it is opened, quote its number on the shipping documents; if you reissue the proforma, say which credit it belongs to.
How do I write a quantity tolerance?
Write it beside the quantity in the same words the credit will use, for example a percentage more or less. If the proforma allows a tolerance that the credit does not, the bank may refuse the documents.
Which lines belong on a CIF proforma?
The goods, plus the freight and the insurance you will arrange, shown separately so the total equals the credit amount. Under FOB the freight and insurance lines drop out and the buyer arranges them.
How long should the proforma stay valid?
Long enough for the buyer to apply and for the bank to issue the credit, which can take days or weeks. Write the date, and say the price holds only if the credit opens for the stated amount.
How is tax calculated on this template?
The sales tax depends on where the work is supplied, so set the rate that applies to your customer before sending. The editor keeps the net amount, the tax and the total apart, and recalculates all three when you change a quantity, a unit price or the country setting.
Is this template free?
Yes. You can fill in this template and print it or save it as a PDF without an account, and there is no payment step and no watermark on the document. Saving it to your account and downloading Excel or Word files need a free account.
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