There are four main types of pro forma statements. As in, “What if my business got a $50,000 loan next year?” Your pro forma statements for that scenario would show what your income, account balances, and cash flow would look like with a $50,000 loan.ĭifferent but related: you can send clients pro forma invoices to let them know how much their order would be if they placed it today. Pro forma statements look like regular statements, except they’re based on what ifs, not real financial results. There are three major pro forma statements:
These statements can help you make a business plan, create a financial forecast, and even get funding from potential investors or lenders. They’re a way for you to test out situations you think may happen in the future. When it comes to accounting, pro forma statements are financial reports for your business based on hypothetical scenarios. Pro forma is actually a Latin term meaning “for form” (or today we might say “for the sake of form, as a matter of form”). Made or carried out in a perfunctory manner or as a formalityīased on financial assumptions or projections According to Merriam-Webster, “pro forma” means:
