A commercial invoice is a legal document issued by the seller to the buyer in international sales transactions. It is a primary document for the customs declaration process.
Essential details in a commercial invoice include exporter and importer details, HS code, incoterm code, product description quantity, price, delivery, and payment terms.
Businesses in international trade need a commercial invoice to comply with customs regulations when exporting and importing goods.
One of the most important documents for international shipping is the commercial invoice.
If you want to ship your products internationally, it is important you have a comprehensive understanding of commercial invoices. With shipping costs rising steadily over the last decade, perfecting your commercial invoices can save you significant time and money.
This article will walk you through the essential information about a commercial invoice for international shipping, including what it is, why it is important, and what to include. Continue reading to learn practical tips on mistakes to avoid when creating commercial invoices to streamline your international trade operations.
A commercial invoice is an essential document that accompanies international shipment. It provides information about the purchase, including the detailed list of goods and price agreed upon between the seller and an international customer.
It is a legal document primarily used in the international trade and shipping industry and is crucial in the customs clearance process. A commercial invoice enables customs officers to assess the appropriate and accurate customs duties based on the true value of the imported goods.
In addition to collecting payments from clients, a commercial invoice serves as an essential document for customs declaration, particularly for calculating import duties. Businesses should always attach commercial invoices to comply with foreign trade regulations when doing sales transactions involving shipping across international borders.
The commercial invoice is a vital document for international trade, serving as a contract and a proof of sale between the buyer and seller. It's indispensable for customs clearance because it provides important information about the transaction, the goods being transported, their value, and the parties involved.
Connor Butterworth CEO & Owner, Southwestern Rugs DepotCan businesses ship their goods without commercial invoices?
Shipping without a commercial invoice is generally not recommended as it would likely result in delays or refusal at customs.
What are the challenges with commercial invoices? And how did you solve them?
Common challenges with commercial invoices include discrepancies in information, which can lead to customs hold-ups and additional charges. Accurate and detailed completion of these documents is crucial. If information mismatches emerge, resolving them swiftly and communicating clearly to all parties is imperative.
Are commercial invoices important for the exporters too?
Both exporters and importers must deal with commercial invoices. For exporters, the invoice is necessary to prove the sale and determine the goods' value. Importers use it to verify what they've received and as a basis for calculating customs duties and taxes.
Like other types of invoices, a commercial invoice is fundamentally used to request payment from customers for goods or services purchased. However, the main difference between commercial and standard invoices is the usage context.
While businesses issue standard invoices to collect payments in domestic sales transactions, commercial invoices are primarily used to request payments from international clients and serve as customs documents.
In short, commercial invoices contain more details to comply with international shipping regulations that are not typically required in standard invoices.
🔍 Tip: Most customs authorities require the commercial invoice to be written in English or have a translated copy attached.
A commercial invoice is a crucial document in cross-border trade as it details the goods being exported and imported across international borders.
Some of the key importance include:
Typically, businesses issue a commercial invoice when shipping internationally so customs authorities can accurately assess taxes and duties. It is not needed for domestic shipping.
One exception to this rule is that shipments between European Union (EU) countries do not require a commercial invoice due to its single market policy, which facilitates the free movement of goods. Nevertheless, a commercial invoice is required for shipments to countries outside the EU, for example, from France to Singapore.
Depending on the regulations of the customs authorities in each country, businesses may have to format the commercial invoice differently. Still, there are three types of essential details that must be included in every commercial invoice template.
A commercial invoice should contain details of both the exporter and the importer to identify the businesses or individuals involved in the transaction. These details should be provided at the top of the commercial invoice.
A commercial invoice should include:
Commercial invoices should provide detailed information about the purchase to ensure a smooth customs process and to facilitate customs officials in assessing accurate taxes and duties.
Here is the information that should be declared on the commercial invoice:
As an important customs document, a commercial invoice must provide additional details relating to the shipping process of the goods. When exporting and importing products, it is crucial to include these pieces of information:
💡 Tip: Some countries may require additional details to be included on the commercial invoice. It is always necessary to check each country’s requirements when you are shipping internationally.
As one of the important customs documents, a commercial invoice should have a clear structure to make it easy to process. Always ensure that all the essential details are included and that they are accurate and legible.
Let’s look at an example of a commercial invoice:
Filling in a commercial invoice is not complicated with a suitable template. You can download free commercial invoice templates from websites such as IncoDocs, FedEx, or TNT Express to simplify and streamline the process. You can fill in, save, and print the commercial invoice with these pre-made templates.
A commercial invoice should be attached to the package where customs authorities can see it.
⚠️ Caution: Always check with your forwarding agent, as some shipping services, such as USPS, have a specific form for commercial invoices.
Yes, there are other documents involved in the shipping process between countries. Apart from a commercial invoice, a pro forma invoice, a bill of lading, and a packing list are also important documents in international customs procedures for import and export.
Let’s look at each of them in detail.
A pro forma invoice is another type of invoice that is commonly used in import and export transactions. It is also referred to as a proforma invoice, and the seller typically sends it to the buyer before issuing a commercial invoice.
Pro forma invoices do not hold the same legal validity as commercial invoices, nor can this document be used for accounting or customs purposes or to request payment. However, the customers can use pro forma invoices to estimate duties or taxes and can plan the import process accordingly.
In short, although both are widely used in international trade, a pro forma invoice is different from a commercial invoice. While a pro forma invoice provides estimated costs before shipment, a commercial invoice specifies the actual finalized costs charged or to be charged.
💡 Tips: For international shipping to the US, it is possible to use a pro forma invoice for customs, although the commercial invoice is still required and needs to be provided within 120 days.
Another important document for international shipment is a bill of lading.
A bill of lading is a legal document that the carrier issues to the exporter as a receipt of shipment. It outlines the details of the goods in transit, including product details, quantity, total weight, method of transportation, shipping route, and the date of shipment.
The difference between a bill of lading and a commercial invoice is the title of ownership. While the commercial invoice provides detailed information on the sales transaction, it does not imply ownership of goods. On the other hand, the bill of lading legally specifies who has the right to claim possession of the goods at the destination.
A packing list is a document that contains an itemized list of the shipment’s contents. It is one of the essential customs documents that is crucial in export transactions, particularly for logistics purposes.
Typically, packing lists provide details similar to commercial invoices, including details of the parties involved, product descriptions, quantity, weight, and delivery and payment details. However, packing lists should also include the following details:
Although both a packing list and a commercial invoice serve as crucial export documents, their role are different. A commercial invoice primarily deals with the financial aspect of the transaction. On the other hand, a packing list concerns the description of the actual material in transit to facilitate international freight forwarders or transport agencies to know what they are transporting.
It is a legal requirement that a commercial invoice is properly completed and filled out accurately to comply with customs regulations.
To avoid unnecessary hold-ups, shipping delay costs, or legal ramifications from tax authorities, make sure that every detail in the commercial invoice is correct and accurate before dispatching the package, especially the price and payment details that may cause customs duties miscalculations.
Here are the common mistakes to avoid when creating a commercial invoice:
When shipping goods across borders, you must be aware of the requirements imposed by customs authorities. Remember that a commercial invoice containing crucial information, such as the types of goods being shipped, their value, dimensions, and weight, is essential for customs officials to determine the correct import duties and taxes.
Now that you've reached the end of this article, you have a comprehensive understanding of the importance of commercial invoices in international trade.
With these best practices, you can confidently navigate the complexities of international shipping and avoid any potential shipment delays or financial losses.
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