Businesses issuing a good's invoice for international trade need to provide the right information needed for swift border clearance.
What is a Commercial Invoice?
A commercial invoice is a customs document used for foreign shipping. Commercial invoices serve as a legal agreement between the seller and the buyer and provide a detailed description of the goods sold and the amount due to the business.
This article outlines all the different kinds of invoices small businesses may need to send to their customers.
A commercial invoice can be used in the following situations related to the process of shipping goods internationally:
the buyer and seller use commercial invoices to outline all items being bought and sold.
the buyer uses the commercial invoice to send funds for payment through its bank and on to the seller.
if the goods shipped are insured and the buyer makes an insurance claim against the goods, the commercial invoice serves as an important support document in the claim.
But for our purposes, two elements are vitally important:
The importer or the acting customs official in the country of purchase requires a commercial invoice before clearing the goods through customs.
Governments use commercial invoices to assess the true value of goods for customs and duties.
Benefits of insisting on an international commercial invoice
Reduce delays – If the appropriate documentation is clear, concise and inclusive of all required information, it will significantly reduce delays within Customs, as they will have all information necessary to make a decision of the contents easily.
Informs custom’s security of contents – If Customs does not have the required documentation, the package(s) could face additional examinations. This would entail holding a shipment for as long as necessary to conduct the exam, and could potentially cause all future shipments sent by the shipper to be delayed as well.
If the information on the commercial invoice matches the customs entry form, then the custom agent can deduce that the package is safe and secure. This will make the decision of the cargo package to enter the country quicker.
Elements of a Commercial Invoice
The shippers first name, last name and address.
The consignees first name, last name and address.
The terms of the sale, amount paid and currency information (in-country it was sold and country it’s coming into).
The full export reason.
A fully detailed description of the item or items sold, inclusive of what the item is made of.
Name of the item and the purpose of the item.
Information identifying if the item requires Harmonized Tariff Codes.
The territory or country of origin for each item in terms of where it was manufactured.
The total number of items or units, the total value of each unit (also considered the purchase price).
The total weight (net and gross) of each package and the total number of packages.
The shippers signature and date.
If an item does not contain any commercial value, then a fair market value or nominal market value must be stated on the Commercial Invoice. In addition, to reduce delays, the information on the Commercial Invoice should be stated in the language of the country of departure and country of import to reduce delays.
Fill in Seller Details
Fill in your business’s details, including the name of your business, its address, phone number and email address.
Fill in Customer Details
Include the name and address of the person or company purchasing your products. You’ll also want to include the shipping address if it differs from the billing address.
Assign an Invoice Number
As with any type of invoice, you’ll want to include a unique invoice number on the commercial invoice. The easiest method of assigning invoice numbers is to do so sequentially, so your first invoice would be Invoice # 001, then Invoice #002 and so on.
Include a Customer Reference Number
In addition to the invoice number, you might want to include a customer reference number on your commercial invoices. Your customers can refer to this number if they need to contact your company with questions, concerns or to return any items they purchase from you.
Include the Incoterms
Detail your Incoterm. This refers to any information regarding the obligations, risks and costs both the seller and buyer take on as part of the sale of goods. Make sure you have discussed with the buyer the consequences of this term in terms of customs clearance responsibility. If you have agreed with DDP Incoterms for a global shipment, remember that you may be responsible for the IMPORT customs clearance and not the buyer in the country.
Detail the Terms of Payment
Detail your terms of payment. This will include important information regarding the terms and conditions you and the customer have agreed to for the sale. Typically, you’ll already have these details worked out as part of the purchase order for the sale or as part of the pro forma invoice.
Identify the Currency
Include on your commercial invoice the currency you and the buyer have agreed upon for payment for the sale. Often, the currency of settlement will be the currency of the seller’s country.
Include Shipment Method
Indicate how your products will be shipped to the buyer, for example, by air, by ocean or by surface shipping.
Include the Quantity
Detail the total quantity of each product to be purchased and shipped.
Describe the Items
Provide a complete description of all items to be shipped. This includes the container type they’re packaged in (i.e. a box, envelope, etc.), the gross weight of each container, the quantity of each product and the unit of measurement.
Provide the Unit of Measure
Provide the total net weight and total gross weight of each item to be shipped, expressed in kilograms. Include the unit price of the merchandise, per unit of measure.
List Commodity Code
8 digit export code out of your country. Make sure it is correct and have been checked thoroughly. Do not guess the code or make it up.
List the Price and Value
Include the total price for the shipment and list the total commercial value, which is the total value of all goods covered on the invoice.
Record Package Marks
Record any box markings or numbers (for example, if you’re shipping multiple boxes, you may label them box 1 of 3, box 2 of 3, box 3 of 3).
Detail Miscellaneous Charges
Record any miscellaneous charges the customer is expected to pay, such as insurance, export transportation, etc.
Commercial Invoice Templates
Guide for completion of a Commerical Invoice (by UPS)
Where to find more help and support
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