Pro forma
Encyclopedia
The term pro forma is a term applied to practices or documents that are done as a pure formality, perfunctory, or seek to satisfy the minimum requirements or to conform to a convention
or doctrine
. It has different meanings in different fields.
are those earnings of companies
in addition to actual earnings calculated under Generally Accepted Accounting Principles
(IFRS, US GAAP etc) in their quarterly and yearly financial reports.
The pro forma accounting is a statement of the company's financial activities while excluding "unusual and nonrecurring transactions
" when stating how much money the company actually made. Expenses often excluded from pro forma results include company restructuring
costs, a decline in the value of the company's investments, or other accounting charges, such as adjusting the current balance sheet
to fix faulty accounting practices in previous years.
Companies that report a pro forma income statement or balance sheet usually do so because the events being excluded were unusual so the GAAP financial reports required by law or accounting standards are misleading to investor
s and potential investors. A hypothetical crisis that happened this last quarter is not going to recur in future quarters, so the pro forma results can be used by investors to forecast what a "regular" quarter might portend in the future.
Critics note that pro forma numbers typically look more profitable than GAAP numbers, and state that many companies intentionally use pro forma results in order to mislead investors into believing the company is in much better financial shape than it is; that there is no defined meaning or accounting standard for "pro forma" and that it is therefore impossible to make an "apples to apples
" comparison between companies with pro forma results in the way that GAAP accounting allows; and that most "unusual events" reported as such are part of the ordinary course of business and should be reported as such. It may be argued that it is dishonest to claim that restructuring charges are unusual, one-time events that investors should not anticipate in the future.
There was a boom in the reporting of pro forma results in the USA starting in the late 1990s, with many dot-com companies
using the technique to recast their loss
es as profit
s, or at least to show smaller losses than the US GAAP accounting showed. The U.S. Securities and Exchange Commission requires publicly traded companies
in the United States to report US GAAP-based financial results, and has cautioned companies that using pro forma results to obscure US GAAP results would be considered fraud
if used to mislead investors.
, pro forma financial statement
s are prepared in advance of a planned transaction
, such as a merger, an acquisition, a new capital investment, or a change in capital structure such as incurrence of new debt
or issuance of equity
. The pro forma models the anticipated results of the transaction, with particular emphasis on the projected cash flows, net revenues and (for taxable entities) taxes. Consequently, pro forma statements summarize the projected future status of a company, based on the current financial statements. For example, when a transaction with a material effect on a company's financial condition is contemplated, the Finance Department will prepare, for management and Board review, a business plan
containing pro forma financial statements
demonstrating the expected effect of the proposed transaction on the company's financial viability. Lenders and investors will require such statements to structure or confirm compliance with debt covenants such as debt service reserve coverage and debt to equity ratio
s. Similarly, when a new corporation is envisioned, its founders will prepare pro forma financial statements
for the information of prospective investors. Pro forma figures should be clearly labeled as such and the reason for any deviation from reported past figures clearly explained.
In trade transactions, a pro forma invoice
is a document that states a commitment from the seller to sell goods to the buyer
at specified prices and terms. It is used to declare the value of the trade. It is not a true invoice, because it is not used to record accounts receivable
for the seller and accounts payable
for the buyer.
Simply, a 'Proforma Invoice' is a Confirmed Purchase Order where buyer and Supplier agree on the Product Detail and cost to be shipped to buyer.
A sales quote
is prepared in the form of a pro forma invoice which is different from a commercial invoice. It is used to create a sale and is sent in advance of the commercial invoice. The content of a pro forma invoice is almost identical to a commercial invoice and is usually considered a binding agreement although the price may change in advance of the final sale.
Banks usually prefer a pro forma invoice to a quotation for establishment of a letter of credit
or for advance payment by the importer through his bank.
In some countries, customs
may accept a pro forma invoice (generated by the import
er and not the export
er) if the required commercial invoice is not available at the time when filing entry documents at the port of entry
to get goods released from customs. The U.S. Customs and Border Protection
, for example, uses pro forma invoices to assess duty
and examine goods, but the importer on record is required to post a bond
and produce a commercial invoice within 120 days from the date of entry. If the required commercial invoice is needed for statistical purposes, the importer has to produce the commercial invoice within 50 days from the date Customs releases the goods to the importer.
In law
, pro forma court rulings
are intended merely to facilitate the legal process (to move matters along).
Pro forma audiences are used to obey a formal demand. For example, one pro forma audience may be heard for a judge to order the production of a certain proof or to schedule another date.
, pro forma drawings are used to facilitate the drawing release of imaginary pieces.
nations with a Westminster system
, such as the United Kingdom
, Canada
, and Australia
, pro forma bills are introduced immediately before consideration of the Speech from the Throne
. Pro forma bills are incomplete pieces of legislation and undergo only the first reading
stage. They symbolize the authority of the parliament
to discuss matters other than those specified by the head of state
, for which ostensibly parliament was summoned. After first reading, the bill is never considered further. The pro forma bill was first introduced in the British House of Commons
in 1571.
In the Parliament of the United Kingdom
, the equivalents are the Outlawries Bill
in the House of Commons
and the Select Vestries Bill
in the House of Lords
. In the Parliament of Canada
, such bills are titled Bill C-1, An Act respecting the Administration of Oaths of Office, and Bill S-1, An Act relating to Railways
in the Canadian House of Commons
and Canadian Senate
, respectively. In the Parliament of Australia
and the parliaments of the Australian states and territories
, the pro forma bills consist only of a short title
, and do not proceed beyond the first reading stage.
, either house
of the United States Congress
(the United States House of Representatives
or the United States Senate
) can hold a pro forma session at which no formal business is expected to be conducted. This is usually to fulfill the obligation under the Constitution
"that neither chamber can adjourn for more than three days without the consent of the other." Pro forma sessions can also be used to prevent the President
from making recess appointment
s, pocket-vetoing
bills, or calling the Congress into special session
. Similar practices exist in the state legislatures, and for similar reasons; for example, in Minnesota
, legislative bodies have the same every-three-days meeting requirement that Congress has. Pro forma sessions are held to meet this requirement.
when there is no sale between the sender and the importer (for example, in the case of an RMA
for replacement goods), or if the terms of the sale between the seller and the buyer are such that a commercial invoice is not yet available at the time of the international shipment. A pro forma invoice is required to state the same facts that the commercial invoice would and the content is prescribed by the governments who are a party to the transaction.
Convention (norm)
A convention is a set of agreed, stipulated or generally accepted standards, norms, social norms or criteria, often taking the form of a custom....
or doctrine
Doctrine
Doctrine is a codification of beliefs or a body of teachings or instructions, taught principles or positions, as the body of teachings in a branch of knowledge or belief system...
. It has different meanings in different fields.
Accounting
In accounting, pro forma earningsIncome
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
are those earnings of companies
Company
A company is a form of business organization. It is an association or collection of individual real persons and/or other companies, who each provide some form of capital. This group has a common purpose or focus and an aim of gaining profits. This collection, group or association of persons can be...
in addition to actual earnings calculated under Generally Accepted Accounting Principles
Generally Accepted Accounting Principles
Generally Accepted Accounting Principles refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards...
(IFRS, US GAAP etc) in their quarterly and yearly financial reports.
The pro forma accounting is a statement of the company's financial activities while excluding "unusual and nonrecurring transactions
Expense
In common usage, an expense or expenditure is an outflow of money to another person or group to pay for an item or service, or for a category of costs. For a tenant, rent is an expense. For students or parents, tuition is an expense. Buying food, clothing, furniture or an automobile is often...
" when stating how much money the company actually made. Expenses often excluded from pro forma results include company restructuring
Restructuring
Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs...
costs, a decline in the value of the company's investments, or other accounting charges, such as adjusting the current balance sheet
Balance sheet
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...
to fix faulty accounting practices in previous years.
Companies that report a pro forma income statement or balance sheet usually do so because the events being excluded were unusual so the GAAP financial reports required by law or accounting standards are misleading to investor
Investor
An investor is a party that makes an investment into one or more categories of assets --- equity, debt securities, real estate, currency, commodity, derivatives such as put and call options, etc...
s and potential investors. A hypothetical crisis that happened this last quarter is not going to recur in future quarters, so the pro forma results can be used by investors to forecast what a "regular" quarter might portend in the future.
Critics note that pro forma numbers typically look more profitable than GAAP numbers, and state that many companies intentionally use pro forma results in order to mislead investors into believing the company is in much better financial shape than it is; that there is no defined meaning or accounting standard for "pro forma" and that it is therefore impossible to make an "apples to apples
Apples and oranges
A comparison of apples and oranges occurs when two items or groups of items are compared that cannot be validly compared.The idiom, comparing apples and oranges, refers to the apparent differences between items which are popularly thought to be incomparable or incommensurable, such as apples and...
" comparison between companies with pro forma results in the way that GAAP accounting allows; and that most "unusual events" reported as such are part of the ordinary course of business and should be reported as such. It may be argued that it is dishonest to claim that restructuring charges are unusual, one-time events that investors should not anticipate in the future.
There was a boom in the reporting of pro forma results in the USA starting in the late 1990s, with many dot-com companies
Dot-com company
A dot-com company, or simply a dot-com , is a company that does most of its business on the Internet, usually through a website that uses the popular top-level domain, ".com" .While the term can refer to present-day companies, it is also used specifically to refer to companies with...
using the technique to recast their loss
Income statement
Income statement is a company's financial statement that indicates how the revenue Income statement (also referred to as profit and loss statement (P&L), statement of financial performance, earnings statement, operating statement or statement of operations) is a company's financial statement that...
es as profit
Profit (accounting)
In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...
s, or at least to show smaller losses than the US GAAP accounting showed. The U.S. Securities and Exchange Commission requires publicly traded companies
Public company
This is not the same as a Government-owned corporation.A public company or publicly traded company is a limited liability company that offers its securities for sale to the general public, typically through a stock exchange, or through market makers operating in over the counter markets...
in the United States to report US GAAP-based financial results, and has cautioned companies that using pro forma results to obscure US GAAP results would be considered fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
if used to mislead investors.
Business
In businessBusiness
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
, pro forma financial statement
Financial statement
A financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...
s are prepared in advance of a planned transaction
Financial transaction
A financial transaction is an event or condition under the contract between a buyer and a seller to exchange an asset for payment. It involves a change in the status of the finances of two or more businesses or individuals.-History:...
, such as a merger, an acquisition, a new capital investment, or a change in capital structure such as incurrence of new debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
or issuance of equity
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
. The pro forma models the anticipated results of the transaction, with particular emphasis on the projected cash flows, net revenues and (for taxable entities) taxes. Consequently, pro forma statements summarize the projected future status of a company, based on the current financial statements. For example, when a transaction with a material effect on a company's financial condition is contemplated, the Finance Department will prepare, for management and Board review, a business plan
Business plan
A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals....
containing pro forma financial statements
Financial statements
A financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...
demonstrating the expected effect of the proposed transaction on the company's financial viability. Lenders and investors will require such statements to structure or confirm compliance with debt covenants such as debt service reserve coverage and debt to equity ratio
Debt to equity ratio
The debt-to-equity ratio is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. Closely related to leveraging, the ratio is also known as Risk, Gearing or Leverage...
s. Similarly, when a new corporation is envisioned, its founders will prepare pro forma financial statements
Financial statements
A financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...
for the information of prospective investors. Pro forma figures should be clearly labeled as such and the reason for any deviation from reported past figures clearly explained.
In trade transactions, a pro forma invoice
Invoice
An invoice or bill is a commercial document issued by a seller to the buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. An invoice indicates the buyer must pay the seller, according to the payment terms...
is a document that states a commitment from the seller to sell goods to the buyer
Buyer
When someone gets characterised by their role as buyer of certain assets, the term "buyer" gets new meaning:A "buyer" or merchandiser is a person who purchases finished goods, typically for resale, for a firm, government, or organization...
at specified prices and terms. It is used to declare the value of the trade. It is not a true invoice, because it is not used to record accounts receivable
Accounts receivable
Accounts receivable also known as Debtors, is money owed to a business by its clients and shown on its Balance Sheet as an asset...
for the seller and accounts payable
Accounts payable
Accounts payable is a file or account sub-ledger that records amounts that a person or company owes to suppliers, but has not paid yet , sometimes referred as trade payables. When an invoice is received, it is added to the file, and then removed when it is paid...
for the buyer.
Simply, a 'Proforma Invoice' is a Confirmed Purchase Order where buyer and Supplier agree on the Product Detail and cost to be shipped to buyer.
A sales quote
Sales quote
A sales quote allows a prospective buyer to see what costs would be involved for the work they would like to have done. Many businesses provide services that cannot have an upfront price, as the costs involved can vary. This can be due to the materials that would be used , and the manpower that...
is prepared in the form of a pro forma invoice which is different from a commercial invoice. It is used to create a sale and is sent in advance of the commercial invoice. The content of a pro forma invoice is almost identical to a commercial invoice and is usually considered a binding agreement although the price may change in advance of the final sale.
Banks usually prefer a pro forma invoice to a quotation for establishment of a letter of credit
Letter of credit
A standard, commercial letter of credit is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking....
or for advance payment by the importer through his bank.
In some countries, customs
Customs
Customs is an authority or agency in a country responsible for collecting and safeguarding customs duties and for controlling the flow of goods including animals, transports, personal effects and hazardous items in and out of a country...
may accept a pro forma invoice (generated by the import
Import
The term import is derived from the conceptual meaning as to bring in the goods and services into the port of a country. The buyer of such goods and services is referred to an "importer" who is based in the country of import whereas the overseas based seller is referred to as an "exporter". Thus...
er and not the export
Export
The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer"...
er) if the required commercial invoice is not available at the time when filing entry documents at the port of entry
Port of entry
In general, a port of entry is a place where one may lawfully enter a country. It typically has a staff of people who check passports and visas and inspect luggage to assure that contraband is not imported. International airports are usually ports of entry, as are road and rail crossings on a...
to get goods released from customs. The U.S. Customs and Border Protection
U.S. Customs and Border Protection
U.S. Customs and Border Protection is a federal law enforcement agency of the United States Department of Homeland Security charged with regulating and facilitating international trade, collecting import duties, and enforcing U.S. regulations, including trade, customs and immigration. CBP is the...
, for example, uses pro forma invoices to assess duty
Duty (economics)
In economics, a duty is a kind of tax, often associated with customs, a payment due to the revenue of a state, levied by force of law. It is a tax on certain items purchased abroad...
and examine goods, but the importer on record is required to post a bond
Surety bond
A surety bond is a promise to pay one party a certain amount if a second party fails to meet some obligation, such as fulfilling the terms of a contract...
and produce a commercial invoice within 120 days from the date of entry. If the required commercial invoice is needed for statistical purposes, the importer has to produce the commercial invoice within 50 days from the date Customs releases the goods to the importer.
Law
In law
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
, pro forma court rulings
Court order
A court order is an official proclamation by a judge that defines the legal relationships between the parties to a hearing, a trial, an appeal or other court proceedings. Such ruling requires or authorizes the carrying out of certain steps by one or more parties to a case...
are intended merely to facilitate the legal process (to move matters along).
Pro forma audiences are used to obey a formal demand. For example, one pro forma audience may be heard for a judge to order the production of a certain proof or to schedule another date.
Engineering
In engineeringEngineering
Engineering is the discipline, art, skill and profession of acquiring and applying scientific, mathematical, economic, social, and practical knowledge, in order to design and build structures, machines, devices, systems, materials and processes that safely realize improvements to the lives of...
, pro forma drawings are used to facilitate the drawing release of imaginary pieces.
Commonwealth system
In certain CommonwealthCommonwealth of Nations
The Commonwealth of Nations, normally referred to as the Commonwealth and formerly known as the British Commonwealth, is an intergovernmental organisation of fifty-four independent member states...
nations with a Westminster system
Westminster System
The Westminster system is a democratic parliamentary system of government modelled after the politics of the United Kingdom. This term comes from the Palace of Westminster, the seat of the Parliament of the United Kingdom....
, such as the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, and Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, pro forma bills are introduced immediately before consideration of the Speech from the Throne
Speech from the Throne
A speech from the throne is an event in certain monarchies in which the reigning sovereign reads a prepared speech to a complete session of parliament, outlining the government's agenda for the coming session...
. Pro forma bills are incomplete pieces of legislation and undergo only the first reading
Reading (legislature)
A reading of a bill is a debate on the bill held before the general body of a legislature, as opposed to before a committee or other group. In the Westminster system, there are usually several readings of a bill among the stages it passes through before becoming law as an Act of Parliament...
stage. They symbolize the authority of the parliament
Parliament
A parliament is a legislature, especially in those countries whose system of government is based on the Westminster system modeled after that of the United Kingdom. The name is derived from the French , the action of parler : a parlement is a discussion. The term came to mean a meeting at which...
to discuss matters other than those specified by the head of state
Head of State
A head of state is the individual that serves as the chief public representative of a monarchy, republic, federation, commonwealth or other kind of state. His or her role generally includes legitimizing the state and exercising the political powers, functions, and duties granted to the head of...
, for which ostensibly parliament was summoned. After first reading, the bill is never considered further. The pro forma bill was first introduced in the British House of Commons
British House of Commons
The House of Commons is the lower house of the Parliament of the United Kingdom, which also comprises the Sovereign and the House of Lords . Both Commons and Lords meet in the Palace of Westminster. The Commons is a democratically elected body, consisting of 650 members , who are known as Members...
in 1571.
In the Parliament of the United Kingdom
Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...
, the equivalents are the Outlawries Bill
Outlawries Bill
A Bill for the more effectual preventing clandestine Outlawries, usually referred as Outlawries Bill, is customarily the first bill on the agenda of the United Kingdom's House of Commons at the start of each session of Parliament.-Ceremonial purpose:...
in the House of Commons
British House of Commons
The House of Commons is the lower house of the Parliament of the United Kingdom, which also comprises the Sovereign and the House of Lords . Both Commons and Lords meet in the Palace of Westminster. The Commons is a democratically elected body, consisting of 650 members , who are known as Members...
and the Select Vestries Bill
Select Vestries Bill
A bill for the better regulating of Select Vestries, usually referred to as the Select Vestries Bill, is customarily the first bill introduced and debated in the United Kingdom's House of Lords at the start of each session of Parliament...
in the House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
. In the Parliament of Canada
Parliament of Canada
The Parliament of Canada is the federal legislative branch of Canada, seated at Parliament Hill in the national capital, Ottawa. Formally, the body consists of the Canadian monarch—represented by her governor general—the Senate, and the House of Commons, each element having its own officers and...
, such bills are titled Bill C-1, An Act respecting the Administration of Oaths of Office, and Bill S-1, An Act relating to Railways
Bills C-1 and S-1
Bills C-1 and S-1 are pro forma bills introduced in the House of Commons and Senate respectively at the opening of each session of the Parliament of Canada. The bills are given a first reading and are then never proceeded with further. Being pro forma pieces of legislation, introducing them is...
in the Canadian House of Commons
Canadian House of Commons
The House of Commons of Canada is a component of the Parliament of Canada, along with the Sovereign and the Senate. The House of Commons is a democratically elected body, consisting of 308 members known as Members of Parliament...
and Canadian Senate
Canadian Senate
The Senate of Canada is a component of the Parliament of Canada, along with the House of Commons, and the monarch . The Senate consists of 105 members appointed by the governor general on the advice of the prime minister...
, respectively. In the Parliament of Australia
Parliament of Australia
The Parliament of Australia, also known as the Commonwealth Parliament or Federal Parliament, is the legislative branch of the government of Australia. It is bicameral, largely modelled in the Westminster tradition, but with some influences from the United States Congress...
and the parliaments of the Australian states and territories
Parliaments of the Australian states and territories
The Parliaments of the Australian states and territories are legislative bodies within the federal framework of the Commonwealth of Australia. Before the formation of the Commonwealth in 1901, the six Australian colonies were self-governing, with parliaments which had come into existence at various...
, the pro forma bills consist only of a short title
Short title
The short title is the formal name by which a piece of primary legislation may by law be cited in the United Kingdom and other Westminster-influenced jurisdictions , as well as the United States. It contrasts with the long title which, while usually being more fully descriptive of the...
, and do not proceed beyond the first reading stage.
United States
In the United States federal governmentFederal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...
, either house
Chambers of parliament
Many parliaments or other legislatures consist of two chambers : an elected lower house, and an upper house or Senate which may be appointed or elected by a different mechanism from the lower house. This style of two houses is called bicameral...
of the United States Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
(the United States House of Representatives
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
or the United States Senate
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
) can hold a pro forma session at which no formal business is expected to be conducted. This is usually to fulfill the obligation under the Constitution
United States Constitution
The Constitution of the United States is the supreme law of the United States of America. It is the framework for the organization of the United States government and for the relationship of the federal government with the states, citizens, and all people within the United States.The first three...
"that neither chamber can adjourn for more than three days without the consent of the other." Pro forma sessions can also be used to prevent the President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
from making recess appointment
Recess appointment
A recess appointment is the appointment, by the President of the United States, of a senior federal official while the U.S. Senate is in recess. The U.S. Constitution requires that the most senior federal officers must be confirmed by the Senate before assuming office, but while the Senate is in...
s, pocket-vetoing
Pocket veto
A pocket veto is a legislative maneuver in United States federal lawmaking that allows the President to veto a bill indirectly.The U.S. Constitution limits the President's period for decision on whether to sign or veto any legislation to ten days while the United States Congress is in session...
bills, or calling the Congress into special session
Special session
In a legislature, a special session is a period when the body convenes outside of the normal legislative session. This most frequently occurs in order to complete unfinished tasks for the year , such as outlining the government's budget for the next fiscal year, biennium, or other period...
. Similar practices exist in the state legislatures, and for similar reasons; for example, in Minnesota
Minnesota
Minnesota is a U.S. state located in the Midwestern United States. The twelfth largest state of the U.S., it is the twenty-first most populous, with 5.3 million residents. Minnesota was carved out of the eastern half of the Minnesota Territory and admitted to the Union as the thirty-second state...
, legislative bodies have the same every-three-days meeting requirement that Congress has. Pro forma sessions are held to meet this requirement.
International Trade (Importing/Exporting)
A pro forma invoice is much the same as a commercial invoice which, when used in international trade, represents the details of an international sale to customs authorities. A pro forma invoice is presented in the place of a commercial invoiceCommercial invoice
A commercial invoice is a document used in foreign trade. It is used as a customs declaration provided by the person or corporation that is exporting an item across international borders...
when there is no sale between the sender and the importer (for example, in the case of an RMA
Return Merchandise Authorization
A Return Merchandise Authorization , sometimes Return Merchandise Agreement or ' product repaired or replaced or in order to receive a refund or credit for another product from the same retailer or corporation within the product's warranty period.The RMA process and the issuance of an RMA is a key...
for replacement goods), or if the terms of the sale between the seller and the buyer are such that a commercial invoice is not yet available at the time of the international shipment. A pro forma invoice is required to state the same facts that the commercial invoice would and the content is prescribed by the governments who are a party to the transaction.
See also
- buzzwordBuzzwordA buzzword is a term of art, salesmanship, politics, or technical jargon that is used in the media and wider society outside of its originally narrow technical context....
- Choice architectureChoice architectureChoice architecture describes the way in which decisions are influenced by how the choices are presented , and is a term used by Cass Sunstein and economist Richard Thaler in the 2008 book Nudge: Improving Decisions about Health, Wealth, and Happiness...
- Customer serviceCustomer serviceCustomer service is the provision of service to customers before, during and after a purchase.According to Turban et al. , “Customer service is a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer...
- Demand chainDemand chain-Concept:Analysing the firm's activities as a linked chain is a tried and tested way of revealing value creation opportunities. The business economist Michael Porter of Harvard Business School pioneered this value chain approach: "the value chain disaggregates the firm into its strategically...
- Point of salePoint of salePoint of sale or checkout is the location where a transaction occurs...
- RetailingRetailingRetail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
- Sales (accounting)Sales (accounting)In bookkeeping, accounting, and finance, Net sales are operating revenues earned by a company when it sells its products. Revenue are reported directly on the income statement as Sales or Net sales....
- Sales Incentive Plan
- Sales process engineeringSales process engineeringSales process engineering has been described as “the systematic application of scientific and mathematical principles to achieve the practical goals of a particular sales process". Selden pointed out that in this context, sales referred to the output of a process involving a variety of functions...
- Sales managementSales managementSales management is a business discipline which is focused on the practical application of sales techniques and the management of a firm's sales operations. It is an important business function as net sales through the sale of products and servicess and resulting profit drive most commercial...
- Sales territorySales territorySales territories are the customer groups or geographic districts for which individual salespeople or sales teams hold responsibility. Territories can be defined on the basis of geography, sales potential, history, or a combination of factors...
- Sales varianceSales varianceSales variance is the difference between actual sales and budget sales. It is used to measure the performance of a sales function, and/or analyze business results to better understand market conditions....
- SellingSellingSelling is offering to exchange something of value for something else. The something of value being offered may be tangible or intangible. The something else, usually money, is most often seen by the seller as being of equal or greater value than that being offered for sale.Another person or...
- TradeTradeTrade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
- TransactionFinancial transactionA financial transaction is an event or condition under the contract between a buyer and a seller to exchange an asset for payment. It involves a change in the status of the finances of two or more businesses or individuals.-History:...
- Vendor
- Itex CorporationItex CorporationItex Corporation is an American company that provides a marketplace for cashless business transactions. The firm specializes in information technology and electronic funds transfer lifecycle management in an emerging niche market of cashless payment between firms...