A commercial invoice is a primary legal document required when making international shipments. It is a contract issued by the exporter of the goods (typically the seller or consignor) for the importer of goods (buyer or consignee).
Its primary purpose is to:
- Provide proof of sale between the seller and buyer;
- Be used during customs clearances for the calculation of taxes and duties.
There is no fixed format for a commercial invoice, however, it should detail the price, quantity and full description of goods being sold. It should also include any terms and conditions of trade agreed upon by the consignor and consignee.
- A commercial invoice is an important document issued by a consignor in international shipping.
- A commercial invoice is used during customs clearance to determine any taxes and duties owed.
- Commercial invoices are legal contracts between consignors and consignees. They primarily detail:
- the price, quantity and description of goods being exported,
- the terms and conditions agreed upon by both parties.
Importance of a Commercial Invoice
Unlike the Bill of Lading (BoL), a commercial invoice does not authorize a transfer of ownership of shipped goods. Instead, it is used as a breakdown of the taxes and tariffs payable by the consignee, which greatly speeds up customs clearance processes.
It is an important document that details most of the necessary information for international trade, benefitting consignees, consignors and customs in the following ways:
- Required by customs
A commercial invoice is used during customs clearance for commodity control and valuation. It is used to calculate the duties and taxes owed by the consignee.
- Helps with record keeping
The document thoroughly details information about the consignee, consignor and the description and value of goods. It thus exists as a comprehensive written record for international trade transactions.
- Prevents exploitation
A commercial invoice legally binds both parties to complete the transaction in accordance with mutually agreed upon terms. Consignees get to cross-check the goods received against the item price, quantity and quality thoroughly described in the document. Consignors get to serve a notice of payment.
Commercial Invoice Template — How To Fill In
There is no fixed format for commercial invoices, but there are several main details that are important to cover. If a freight forwarder is hired, they typically provide customs clearance services. They will review the document to ensure it is optimized to make the customs process more efficient.
Below is a sample of a commercial invoice:
Important details that need to be included are:
- BoL number / Air waybill (AWB) number
- Date of export
- Consignor’s export references: invoice number and order number
- Consignor’s and consignee’s names, complete addresses and tax identification numbers
- Details about the export: country of export, reason for export, country of ultimate destination
- Importer’s name, address and contact number (if not the same as consignee)
- Full description of the goods, including number of packages, weight, price, 6 digit HS code
- Total weight, number of packages, currency and total invoice value
- Payment method and incoterm
- Consignor’s name and signature
How To Value Free Samples (No Value Commercial Invoice)
When shipping free samples, it is recommended to include the item’s actual value with a note to state that there will be no charge to the consignee. The consignor may also write down that the value stated is for customs use only.
It is common practice for brands to intentionally damage samples to prevent buyers from reselling them. For example, an ecommerce company may receive a slit, devalued pair of socks as a sample when considering adding a brand’s line to their store. In these types of cases, a “zero” value may be indicated with a note attached, similar to the one described above.
Difference Between a Commercial Invoice and Other Invoices
Commercial invoice vs tax invoice
A tax invoice is issued by a supplier, registered dealer or service tax provider. It details the amount charged for goods and services and its base amount, on which tax is payable. Businesses can use it as a primary document for claiming input tax credit for goods and services.
A commercial invoice is issued by a company or individual exporting goods internationally. It details descriptions of the goods being sold, its quantity and price, and the terms of sale. It is used by customs to calculate duties taxes and cannot be used to claim input tax credits.
Commercial invoice vs proforma invoice
A proforma invoice is issued before a transaction, giving prospective buyers an estimated breakdown of the goods they might want to import. It is a quotation that outlines the proposed terms of the transaction. It is not legally binding.
A commercial invoice is issued while the transaction is taking place, as a request for final payment. It contains terms that have already been agreed upon by both parties, and is legally binding.
Once a proforma invoice has been agreed upon by the buyer, a commercial invoice is prepared and issued by the seller.