Before You Pay the Deposit: A Chinese Supplier Proforma Invoice Checklist

A proforma invoice can look formal enough to trigger payment: supplier letterhead, bank details, product description, total and stamp. Yet it may still record a different transaction from the one the buyer believes was agreed.

The product revision may be missing. Tooling may have disappeared into the unit price. The trade term may name no place. The payment schedule may say “balance before shipment” even though the accepted quotation required a passed inspection. The payee may not match the supplier that was verified.

The control is not to treat every mismatch as fraud. It is to reconcile the document before money moves.

What a proforma invoice is—and is not

Australian Border Force guidance has described a proforma invoice as an abridged or estimated invoice issued before shipment or delivery and used in negotiation. It distinguishes that document from the commercial invoice recording the actual trade transaction.

A PI can be a useful pre-deposit transaction record. It is not automatically:

• the complete sales contract;
• a demand for payment with a particular legal effect;
• the final commercial invoice;
• proof of the actual price paid or payable;
• a customs declaration;
• proof that the issuer or bank account is legitimate; or
• evidence that the product will conform.

The final document set must be reconciled to the actual quantities, price, shipment and payments. ABF has warned that proforma or shipping invoices may not reflect the true price paid or payable for imported goods.

Start with four reference documents

Do not review the PI in isolation. Put it beside:

1. the verified supplier identity and approved payment-recipient record;
2. the accepted quotation and clarification matrix;
3. the controlled product specification, artwork and approved exceptions; and
4. the agreed purchase order or contract terms, including payment milestones.

The task is simple in principle: every material PI entry should trace to an accepted basis. A new term should be treated as a proposed change, not silently accepted because it appears on the latest document.

Check the issuer and payment recipient

Record the PI issuer's full legal or registered business name, address and contact details. Compare them with the supplier that passed verification and the entity named in the accepted order.

Then review the payment instructions through the buyer's established financial-control process:

• beneficiary name;
• bank name and country;
• account details;
• currency;
• payment reference; and
• reason for any intermediary, affiliate or different recipient.

A name difference is not proof of wrongdoing. Trading groups, export entities and payment arrangements can involve more than one party. But the relationship and authority should be explained, documented and independently checked before payment.

Treat a late request to change recipient or bank details as a new verification event. Confirm it through an established contact route rather than replying only to the message that announced the change. A matching name alone does not complete supplier due diligence, and a company stamp does not by itself establish authority or enforceability.

Match the product to a controlled revision

Descriptions such as “premium bottle”, “custom storage box” or a marketplace link are not sufficient order identifiers.

For every line item, the PI should enable the buyer to identify:

• SKU or model;
• product name;
• specification and revision;
• drawing, bill of materials or technical attachment where relevant;
• material, grade, finish and colour reference;
• size or variant;
• artwork and packaging revision;
• approved sample or reference status where relevant; and
• every accepted exception.

The PI does not need to reproduce a 30-page specification. It should incorporate the correct controlled documents by unambiguous reference and avoid contradictory shorthand.

If the supplier's system truncates descriptions, attach an acknowledged order schedule. Do not allow system limitations to turn a precise purchase into an undefined one.

Recalculate quantity, price and total

Check the arithmetic independently.

Confirm whether the amount is tax-inclusive or exclusive where relevant, and which charges remain outside the supplier invoice. Do not infer Australian landed cost from the PI total alone.

Check the payment schedule against evidence triggers

The PI should reproduce the accepted amounts, currency, due events and payment recipient. Avoid a percentage without a clear base or trigger.

Instead of only “30% deposit, 70% balance”, the order record should make clear:

• the exact deposit amount;
• what the deposit authorises;
• any tooling or progress instalment;
• evidence required before each release;
• the balance amount;
• inspection, correction and reinspection conditions;
• payment timing after acceptance; and
• treatment of authorised variations.

Use the risk method in our guide to Chinese supplier payment terms to align each payment release with defined evidence and a controlled production milestone.

If the PI weakens the accepted payment trigger—from “after passed independent inspection” to “before shipment”, for example—request a corrected document. Do not rely on a separate chat promise to override the payment instrument.

Make the delivery term precise

Incoterms® references should state the selected rule, precise named port, place or point, and edition, for example:

FCA [full named facility and point], Incoterms® 2020

“FOB China”, “EXW factory” or “DDP Australia” is too vague for a controlled comparison. The named place affects where delivery occurs and which tasks, costs and risks are allocated.

Incoterms® rules do not set product quality, payment, title, intellectual-property obligations, remedies or Australian compliance. Those matters remain in the broader purchase record.

Also check:

• requested completion or ready date;
• shipment window;
• mode or service if agreed;
• delivery address where relevant;
• carton count, dimensions and weights when available;
• packaging and pallet requirements;
• document set; and
• who books, approves and pays for any inspection or testing.

Record the compliance-support basis accurately

The supplier should understand which evidence and controls the buyer requires, but the PI must not describe a certificate as though it automatically proves Australian compliance.

Reference:

• applicable product model and revision;
• required test or report scope;
• samples the supplier must provide;
• labels, warnings and instructions;
• inspection access;
• responsibility for changes affecting evidence; and
• any pending approval that prevents production release.

Not every product has a product-specific mandatory standard. The buyer remains responsible for determining the applicable route with appropriate professional advice where needed.

Use a discrepancy log rather than editing from memory

Label the log with PI number, issue date and revision. Send the same controlled clarification to all relevant parties. Close every material item before payment and retain the corrected PI rather than relying only on annotations to an obsolete version.

Reconcile the final transaction documents

The PI review is not finished when the deposit is paid. Later, compare the commercial invoice, packing list, shipping documents and payment record with the actual transaction.

Check for:

• final quantities and values;
• authorised changes and credits;
• correct product descriptions;
• currency and payment totals;
• freight and insurance treatment where relevant;
• package count and weights;
• delivery term and named place; and
• consistency with import declarations and supporting evidence.

If actual production or shipment differs from the proforma basis, document the reason and ensure the final invoice reflects the true transaction. Seek customs or legal advice for material discrepancies rather than altering documents to force an artificial match.

Pre-deposit PI checklist

• [ ] PI number, date, revision and validity are shown.
• [ ] Issuer matches the approved contracting supplier or the relationship is documented.
• [ ] Payment recipient and any difference are independently verified.
• [ ] SKU, specification, artwork, packaging and approved exceptions are traceable.
• [ ] Quantities by variant match the accepted schedule.
• [ ] Unit price, currency, tooling, samples, testing, packaging and freight are itemised.
• [ ] Arithmetic and deposit/balance amounts have been recalculated.
• [ ] Every payment trigger matches the accepted milestone record.
• [ ] Incoterms® rule, precise named place and edition are complete.
• [ ] Production, inspection and shipment dates are defined.
• [ ] Inspection, testing, documentation and change-control responsibilities are recorded.
• [ ] Material discrepancies have been closed through a reissued document.
• [ ] The later commercial invoice and shipment records will be reconciled to actuals.

A PI should make the deal easier to verify

A proforma invoice is valuable when it condenses the accepted transaction into a traceable pre-deposit record. It is dangerous when its formal appearance discourages the buyer from checking what it actually says.

Compare it with the verified supplier, controlled specification, accepted quotation and payment milestones. Correct discrepancies before funds are released, then reconcile the final commercial and shipping documents to the real transaction.

OPL helps Australian businesses define and verify China sourcing orders before deposits and production commitments are released. Contact OPL for support with a controlled supplier purchase.

Sources

1. Australian Border Force — Goods Compliance Update, December 2016
2. Australian Border Force — Goods Compliance Update, March 2016
3. business.gov.au — Prepare quotes
4. business.gov.au — Suppliers
5. Reddit r/Alibaba — First bulk furniture order and PI questions