When does a proforma become an order?

The proper moment when a proforma becomes an order is when the customer approves and agrees to pricing. This indicates a mutual agreement between the buyer and the seller, which is fundamental in the sales process. Until this approval is obtained, the proforma serves primarily as a quotation or an estimate, outlining potential prices and conditions, rather than a binding contract or order.

The significance of customer approval lies in the commitment it embodies; once the customer agrees to the terms, the transaction can move forward into the fulfillment stage. This agreement establishes legal obligations for both parties, signaling that the business relationship is transitioning from a negotiation phase to a confirmed sale. By obtaining this approval, the organization can proceed with processing the order, managing inventory, and planning for delivery.

Other options do not represent the transition from a proforma to an order. A financial analysis, the generation of financial reports, or finalizing details by a treasury officer, while essential in their own contexts, do not directly touch upon the customer's consent regarding pricing, which is the cornerstone of order acceptance.