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Pro forma, payment request and receipt: the difference, and what counts as income

Pro forma, payment request, receipt and tax invoice in Israel. Which one is income, and why a report never counts a request and its receipt twice.

Updated 2026-10-14

A small business issues several kinds of documents, and each has a different job. Some ask for money, some record money received, and only some count as income. Mix them up and the reports go wrong: the same payment counted twice, or income not counted at all.

Documents that ask for money

These go out before the client pays. They are not bookkeeping documents, and they do not count as income [1]:

  • Quote: what the work will cost. It stays editable until it becomes another document [1].
  • Payment request: a request to pay an amount [1].
  • Pro forma invoice (חשבון עסקה): the same job as a payment request. It prints "אינו חשבונית מס" (not a tax invoice) on every copy [1]. It is available to both an עוסק פטור and an עוסק מורשה [1].

Each has its own number series [1]. A plain pro forma never gets a Tax Authority allocation number, whatever the amount [2].

Documents that record money received

  • Receipt: records a payment received. A receipt is required for every payment, issued close to it [1]. For an עוסק פטור, the receipt is the income.
  • Tax invoice/receipt: for an עוסק מורשה, one document that both charges VAT and records the payment [1].

Tax invoice

A tax invoice belongs to an עוסק מורשה. It shows the words "חשבונית מס" and "עוסק מורשה" with the VAT number, a serial number, the date, the client name, a description, the amount before VAT, the VAT and the total [1]. A tax invoice above ₪5,000 before VAT to a client who is an עוסק מורשה needs an allocation number [2].

A service provider reporting on a cash basis issues a tax invoice within 14 days of receiving payment, under section 46(a) of the VAT law [1].

What counts as income

The simple rule: a document that asks for money is a charge, a document that records money is income [1].

When a client gets a payment request and then pays, there are two documents: the request and the receipt. Only the receipt is income. A report that adds both shows double the truth [1].

To prevent that, the receipt should be created from the request and point back to it. Then you can see that the request is closed, and the money is counted once.

The usual flow

עוסק פטור:

  1. A quote, if needed.
  2. A payment request or a pro forma.
  3. A receipt when the money arrives.

עוסק מורשה providing services on a cash basis [1]:

  1. A pro forma.
  2. When the money arrives, a tax invoice/receipt, within 14 days of the payment.

A partial payment leaves the rest open on the request, and another receipt closes it.

Foreign currency

A pro forma can be in a foreign currency, for example for a client abroad. By default it shows only the foreign currency, with no shekel amount [1]. When the client pays, the receipt or tax invoice/receipt made from it takes over its lines and the agreed rate [1].

The books themselves are kept in shekels. A bookkeeping document in a foreign currency shows the currency, the foreign amount and the shekel amount (instruction 22) [1]. So the rate matters: it sets the amount recorded as income.

Corrections

None of these documents is edited once issued. A bookkeeping document is corrected by cancellation or credit (instruction 18) [1]. Quotes and payment requests are not bookkeeping documents, but they are numbered in their own series too [1].

How Open Ledger IL does it

In Open Ledger IL, quotes, payment requests and pro formas are numbered in their own series and never counted in income reports. Recording a payment on a request issues a receipt linked to it, and a partial payment leaves the rest open. A pro forma prints "אינו חשבונית מס", and converting it to a receipt or a tax invoice/receipt carries over its lines and the agreed rate. For an עוסק מורשה, the app reminds you to issue the tax invoice within 14 days of the payment.

Try the live demo See pricing and setup

Questions and answers

Is a pro forma (חשבון עסקה) an invoice?
No. It is a request for payment, and it prints "אינו חשבונית מס" (not a tax invoice).
Which document is recorded as income?
The receipt, for an עוסק פטור. For an עוסק מורשה, the tax invoice or the tax invoice/receipt.
Does a pro forma need an allocation number?
No, in normal use. Only when it serves as the advance approval the specification describes.
How soon after a payment do I issue a tax invoice?
A service provider on a cash basis issues a tax invoice within 14 days of the payment.
Does a payment request go into the income report?
No. Quotes and payment requests are not counted in income reports, since they are not bookkeeping documents.

Sources

  1. https://github.com/matanlevanon/open-ledger-il/blob/main/docs/legal-requirements.md
  2. https://github.com/matanlevanon/open-ledger-il/blob/main/docs/israel-invoices-api.md

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