How to Write a Proforma Invoice (PI)

After weeks of negotiating on WeChat, you finally agree on a price. The factory boss says, "Okay, $2.50 per unit. Please send the 30% deposit."

If you wire money based on a WeChat chat log, you are committing financial suicide. In international trade, the legal trigger for a financial transaction is a highly formalized document called the Proforma Invoice (PI). The PI is not just a receipt; it is the physical manifestation of your entire manufacturing contract.

💡 Withyou Trip Expert Verdict: "The absolute deadliest trap in finalizing an order is the 'Vague PI'. A factory will send a PI that just says: '1,000 x Smartwatches - $25,000'. It does not list the battery capacity, the packaging type, or the delivery date. If they ship you 1,000 watches made of cheap plastic instead of steel, you have zero legal recourse because the PI didn't specify the material. You MUST demand an Exhaustive 3-Page PI that lists every single BOM (Bill of Materials) component before you sign it."

1. The Proforma Invoice Anatomy Matrix

Required Section	The Cheap Factory Omission	The Iron-Clad Buyer Requirement
Product Specs	"Model #A123"	🟢 Full BOM attached. Exact materials, weight, and Pantone colors.
Incoterms	Missing or just says "Shipping".	🟢 FOB Shenzhen or EXW Dongguan. Defines exactly where risk transfers.
Banking Info	A personal bank account.	🔴 Must be the exact Corporate Name registered on their Business License.
Delivery Date	"Around 30 days."	🟢 "Production completed 30 days from receipt of deposit."

2. The Penalty Clause (The True Test)

A PI without a penalty clause is just a wish list.

• The Reality: Chinese factories consistently overbook their production lines. If a massive client (like Walmart) places an order, your small $20,000 order will be pushed back by 4 weeks. They will blame "material shortages."
• The Mandate: You must write a Late Penalty Clause directly into the PI before you sign it. The standard is: "If production is delayed beyond 30 days, the Factory agrees to a penalty of 1% of the total order value per week of delay, deducted from the final 70% balance payment."
• The Reaction: A good factory will accept this (often capping it at 5%). A terrible factory will refuse to sign it, which instantly tells you they were planning to delay your order from the beginning.

3. The "Chop" (The Official Company Seal)

In the West, a signature is a legally binding mark. In China, a signature means almost nothing.

• The Trap: A sales rep signs the bottom of the PI with an English name like "Kevin." You wire the money. The factory never delivers. In a Chinese court, the factory owner will say, "I don't know who Kevin is, and that is not my signature."
• The Execution: A PI is only legally binding in China if it is stamped with the company's Official Red Chop (Gongzhang - 公章). This is a circular or oval red ink stamp that contains the company's legally registered Chinese name and a multi-digit government registration number. You must verify the English name on the PI perfectly matches the Chinese characters on that red stamp.

❓ Frequently Asked Questions (FAQ)

Q: If the factory makes a mistake on the PI, can I just cross it out with a pen and sign it? A: No. In international trade, crossed-out text creates a massive legal ambiguity. If the factory made a typo on the lead time or the bank account number, you must reject the PDF, force them to generate a brand new, flawless V2 PDF, stamp it with their red chop again, and send it back. Do not accept handwritten amendments on a multi-thousand-dollar international contract.