How to Read a Chinese Pro Forma Invoice (PI): Line-by-Line Guide

The pro forma invoice (PI) is the document a Chinese supplier sends you to confirm an order before you pay. It looks like a regular invoice and most buyers skim it. That’s expensive — the PI is also your contract, your customs document, and the basis for your future dispute if anything goes wrong.

I’ve signed off on PIs where a one-line change saved $400 in destination handling, and one where I missed a payment-term clause that cost me 8% in interest. Here’s what to actually check, line by line.

What a PI is and isn’t

A pro forma invoice is a draft invoice issued before goods ship. It states:

What you’re buying (line items, prices, quantities)
The agreed payment terms
Shipping terms (incoterms) and the agreed port/destination
Bank account for the deposit wire
Any agreed-on customizations, certifications, or testing

When you sign the PI and pay the deposit, the PI becomes a binding contract in most jurisdictions. The supplier later issues a “commercial invoice” (CI) at shipment, which should match the PI line for line. If it doesn’t match, you have leverage.

Standard PI sections (in the order they appear)

A typical Chinese PI runs one page (rarely two). Sections, top to bottom:

Supplier header — company name, address, contact
Buyer header — your company name, shipping address
PI number, date, validity period
Line items — product, SKU, quantity, unit price, total
Subtotal, discounts, freight (if included)
Total amount and currency
Payment terms
Shipping terms (incoterms + port)
Lead time
Bank account details
Signature lines and chop

Line-by-line: what to actually verify

Supplier header — verify against the business license

The company name on the PI must match the company name on the supplier’s business license (营业执照) exactly. If the Alibaba storefront says “Shenzhen XYZ Trading Co., Ltd.” but the PI header says “Hong Kong XYZ International Trade Ltd.” — these are different legal entities. Money sent to one is not protected by Trade Assurance with the other.

This is the #1 source of “the supplier ran off with my money” problems. The buyer paid a Hong Kong shell account because the PI header listed it, while the Trade Assurance contract was with the mainland China company. No recovery.

PI number and date

Save the PI number for all future correspondence. Reference it in every email and on every wire transfer remittance line. Customs entries reference it too.

Validity period: most PIs are valid 7-15 days. After that, raw material price changes can invalidate the quote. Push back if a factory tries to invalidate a PI within the validity period.

Line items: SKU, description, specs

For each product line, the PI should show:

Item name + your SKU number (use yours, not theirs)
Full technical specs — color, material, dimensions, weight, packaging
Quantity in units AND in cartons (and the units-per-carton number)
Unit price in the agreed currency
Line total

Red flag: a vague description like “LED light, 10W, white.” A proper line reads “Model XYZ-100 LED panel, 10W, color temp 4000K, dimmable 0-10V, white frame finish, 1.5m power cord with US plug, 1 pc per inner box, 20 pcs per master carton (50 × 32 × 28 cm, 8.5 kg).”

Specifics here are your QC standard later. If the PI says “white frame” and you receive cream frames, you have grounds to dispute. If the PI just says “color: as discussed” — you don’t.

Subtotal, freight, packaging fees

Watch for hidden line items. Common ones:

Carton/packaging fee ($0.10-0.50 per piece, sometimes legitimate, sometimes a margin add)
Sample fee credit (if you paid for samples earlier, this credits against the PO)
Mold amortization (if applicable per your tooling deal)
Inspection fee (if the supplier arranges third-party QC)
Document fee ($30-80 for certificate of origin, fumigation, etc.)

Total each line and make sure the math adds up. I’ve caught addition errors on PIs three times in seven years. Always either in the supplier’s favor.

Total amount and currency

Verify the currency (USD vs RMB vs EUR) and the exchange rate basis if RMB.

If the PI is in RMB but you’re paying USD, the supplier will convert at their bank’s rate, which adds 1-2% to the bill. Insist on the PI being in USD if you’re paying USD.

Payment terms

The most common Chinese supplier terms:

30% T/T deposit, 70% T/T balance before shipment: standard for new buyers
30% T/T deposit, 70% against B/L copy: standard for repeat buyers — balance is paid only after the supplier emails you the bill of lading proving goods are on the ship
L/C at sight: letter of credit, formal but expensive — for large orders only
100% T/T before production: only acceptable for tiny orders or trusted partners

Watch for: “100% T/T before shipment” instead of “before production” — this means the supplier wants to be paid the balance before they hand the goods to the freight forwarder. If you’ve been quoted “30% deposit, 70% balance,” confirm explicitly whether the 70% is before shipment (acceptable) or after shipment / on B/L copy (safer for you).

For more on payment methods, see how to pay Chinese suppliers from overseas.

Shipping terms (Incoterms)

This line is one of the highest-cost lines if you misread it.

EXW: ex-works. You pay everything from the factory door — Chinese trucking, port handling, ocean freight, destination charges, customs, last-mile. Headache for a first-time buyer.

FOB Shanghai/Shenzhen/Ningbo: supplier covers everything to the named Chinese port. You arrange ocean freight onward. Most common for experienced buyers.

CIF [destination port]: supplier covers ocean freight and insurance to your destination port. You arrange customs clearance and onward trucking. Less competitive freight rates than booking yourself but simpler.

DDP [your warehouse]: supplier delivers to your door, duties prepaid. Convenient but the freight + duty markup is rarely transparent. Be especially careful — see air freight DDP cautionary tale.

See EXW vs FOB vs DDP explained for the full breakdown of who pays what under each term.

Lead time

Should be stated as “X days after receipt of deposit” or “X days after sample approval.” Avoid vague “30 days after PO confirmation” — push for a specific trigger event.

For custom-tooled products, ensure the lead time accounts for tooling completion + sample approval + production. Some suppliers quote production lead time only, hiding 30-45 days of tooling time.

Bank account details

The most-faked section of any PI. Always verify the bank account through a second channel before wiring:

Bank name and SWIFT code (legitimate banks are recognizable: Bank of China, ICBC, China Construction Bank, China Merchants Bank, HSBC HK)
Account number
Account holder name — must match the supplier company name exactly

If the account name is a person’s name, or a Hong Kong / Singapore / offshore company name different from the supplier on the PI, stop and verify by video call. This is the wire fraud pattern: scammers intercept your email and substitute different bank details before you wire.

I now require a brief video call to confirm bank details for any first wire over $5,000. Five minutes of mild awkwardness, hundreds of times cheaper than a misdirected wire.

Chop and signature

The PI must be stamped with the supplier’s company chop (the round red seal) at the bottom. A signature without a chop is half-binding in China. The chop must match the supplier’s registered company name.

If the PI arrives unsigned and unstamped, send it back. “Please affix your company chop and return for our signature.”

After you sign: keep a copy and version it

When the PI changes — and it will — keep every version. Name them PI_v1_2025-05-22.pdf, PI_v2_2025-05-25.pdf, etc. The final approved version is your contract; earlier versions are evidence of what changed if a dispute arises.

If the commercial invoice that arrives later doesn’t match the PI, raise it before paying the balance. Once you’ve paid in full, your leverage is gone.