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Simple Guide: What Is a Commercial Invoice
When it comes to international transportation, shippers often have to deal with loads of documentation, which can be confusing at first. Various papers are necessary at almost every step for clearance and verification processes. In this article, we will explain what this form is in simple terms and how to fill a commercial invoice template by following easy instructions.
What Is a Commercial Invoice?
A commercial invoice is one of the most prominent legal documents in international trade systems. This document is proof that contains information about the sale of particular products between the parties who made the transaction. Therefore, it is required for those who want to sell and export goods.
A commercial invoice is required for customs clearance purposes and for determining and estimating the duties and taxes that need to be paid. The document must indicate the goods sold, their quantity, price, and cost by prior agreement of the parties. However, the export document does not specify the ownership of the goods indicated in the contract. Nevertheless, a commercial invoice is necessary for customs clearance.
What Are Commercial Invoices Used For?
The commercial invoice definition provides details of the goods being sold. It must also include terms of trade or sale agreed upon by both buyer and seller during conducting the transaction.
Let’s look at the cases when you need to fill out a commercial invoice form:
- this export document may be required by a buyer to send a payment to a seller. For example, if the buyer makes a payment through a bank, then they need to present this document to their bank for the seller to receive the funds;
- in case of any air and sea transportation, as well as for transportation following International Commercial Terms;
- to confirm the transaction between the two parties and guarantee payment to a seller;
- to calculate and evaluate responsibilities and taxes due for sea, air, or ground shipping.
How to Fill Out a Commercial Invoice?
To fill out a commercial invoice, you can use a universal format. You can find various free templates online or use paid, premium options with handy tools for filling. Here is the data you need to specify step by step in the standard commercial invoice form:
- General information. Provide details about your company and recipient, such as contact numbers, addresses, and tax numbers.
- Reason for export. State your reasons for sending the goods to the recipient.
- Shipping date and number. Add the shipping date of your package and the carrier’s number. It’s also known as the air waybill number.
- Incoterms. You need to specify who is responsible for the goods during the delivery process.
- Goods description. Describe the goods you are going to send in detail.
- Quantity of goods and HS Code. Select the appropriate unit of measurement and indicate the number of goods. You need to enter an HS code to inform the customs authorities about the type of items you are shipping.
- Weight, declared value, and insurance costs. Indicate the real value of the entire package according to the market price of the goods. Also, enter weight and shipping costs, including insurance.
- Country of origin. Indicate where the goods were made. The country of manufacturing may differ from the country of shipping.
After completing the form, you need to sign it and check if the information is correct.
Difference Between Proforma Invoice and Commercial Invoice
A proforma invoice and a commercial invoice serve similar purposes when it comes to invoicing. But what is the difference between a proforma and a commercial invoice?
The first document is used to provide the necessary information to the client for them to know what to expect. This form is a summary of the estimate of applicable taxes or shipping charges. A proforma invoice helps customers make a purchasing decision. On the other hand, a commercial invoice is used to determine the taxes and duties for the shipment to inform the customs authority. It helps to evaluate if the shipment meets all the requirements and aids in preventing delays in the delivery. So, when you choose between a proforma invoice vs a commercial invoice, you need to consider these criteria.
This document can help you clear customs and provide important information to the buyer. Double-check the data you submit before sending this form to the recipient. We hope the article has clarified what a commercial invoice is for you, and these simple instructions for filling out the form will come in handy.
Based on the article by pdfliner.com.
Read also: E-Invoicing – Touchless Way To Bill Your Customers