In international trade, a commercial invoice is an important document provided by the exporter to the importer. The buyer or the importer uses this invoice – and other shipping documents – to clear the shipment at customs in the country of import.
A commercial invoice will provide all the important information regarding the shipment to buyers, freight forwarders, customs, agents, and banks. It is mandatory for all sea freight and air freight shipments. So, if an exporter ships airfreight via FedEx or DHL, they must provide a FedEx commercial invoice or a DHL commercial invoice.
Notably, international commercial invoices do not show tax as international transactions may not be subject to local taxes. Hence, the exporter must take care to provide all the information in the correct format so that the importer does not face any trouble at the customs.
Any commercial invoice for shipping & export should contain following essential details:
Apart from these details, the commercial invoice must also have the product details. This would include the description, quantity, HS code/HSN Code, unit type, price, and currency. Do not overlook to mention the terms of trade or the agreement between the two trading parties. In the end, provide the name, date, and signature of the authorized company representative.
Shippers generally prefer using a template in Microsoft Word or Excel to share invoice details. However, these templates tend to miss some important information, which could lead to expensive delays at the customs department of the importing country. It may also confuse buyers and freight forwarders, leading to fines and demurrage charges.
Exporters could consider using export documentation tools such as IncoDocs which allows one to create packing list and other important shipping documents. Most of these templates are aligned to the UN Layout Key recommendations for trade documentation. This, in turn, ensures trade compliance, doing away with any problems and delays in shipment.
The best way, however, is to rely on a pre-filled invoice online. One can find an aligned invoice by the UN’s Economic Commission for Europe (ECE). Or refer to sample invoices from international shipping companies such as FedEx and UPS.
Alternatively, download an invoice format from commercialinvoiceform.org. This allows you to enter the details online directly. It has a glossary of words attached, which outlines the terms on the form by clarifying each section.
The common question arising in businesses is what is the difference between Pro Forma Invoice & Commercial Invoice. Where a pro forma invoice is required in the pre shipment process, it generally gives customer an idea of what to expect, in terms of the details of the transaction, including the price, quality and quantity of the product, payment, delivery terms, etc. In other words, it documents the sale terms, but it doesn’t demand payment.
On the other hand, a commercial invoice is required in the post shipment process. It allows request payment for items that have actually been sold by showing the amount actually to be paid, it will provide information of the seller, buyer, destination, mode of dispatch, current account, freight forwarder, HS code of the product, price, payment terms, and currency of transaction, among other details.
Remember, there is no specific format for creating an invoice. However, it must have all the basic (but important) details of the transaction.
Fill up your invoice carefully. While the taxation ID, address details, and recipient’s details are important, note that if the sender or the recipient were an individual (and not a company) their tax ID would ideally be their Social Security Number or equivalent government identification number.
Finally, ensure that you fill any columns that are not applicable for your shipment with ‘NA’. Do not leave them blank.