Definition

A commercial invoice is a document that lists and describes the products transported between a seller and a buyer.

It serves as documentation of the transaction and provides critical information for customs clearance and payment purposes.

Description

A commercial invoice is an essential international trade document containing specific information about the items being transported from a seller to a buyer across international borders. 

It performs numerous vital functions in the commerce process:

1. Proof of Sale: Evidence of the transaction between the seller (exporter) and the buyer (importer).
2. Customs Clearance: The business invoice is an essential instrument for customs officials, allowing them to calculate duties and taxes, estimate the value of items, and assure import compliance.
3. Detailed Description: The commercial invoice contains a detailed breakdown of the items, including amount, weight, kind, value, and other information required for shipping and customs purposes.
4. Shipping Information: It includes the contact information for the shipper and recipient, the date of shipping, and the delivery terms, commonly referred to as Incoterms (International Commercial Terms).
5. Billing: It specifies the payment terms, including the agreed-upon prices for the goods, the total amount owed, and payment terms, which are critical for enabling financial transactions and credit agreements.

Commercial invoice format
 

This is the commercial invoice format:
 

Importance of commercial invoice

The following example demonstrates the significance of a commercial invoice:

• Helps in record keeping.

Commercial invoices are an essential part of the paper trail for transactions involving imports and exports, and they are needed documents in these operations.

• Proof of Sale

One of the key roles of a commercial invoice is to serve as legal proof that a sale transaction has taken place. It contains all the crucial transactional details, including the names of the buyer and seller, and the description and pricing of the items.

• Guarantees Payment

A commercial invoice is essential for obtaining payment for a sale transaction because it is a legal document that confirms the transaction.

• Assistance in Verification

The importer can cross-check and analyse the cargo's contents to verify if they match the contents indicated on the commercial invoice, thanks to the items' description in terms of quality, quantity, and price.

• Can Serve As A Notice Of Payment Due

The commercial invoice is a reminder for payments due and contains all the information on a regular invoice. It is an effective technique for preserving client relationships.

• Ensures no one is fleeced.

The buyer cannot avoid paying because the commercial invoice is quite thorough and serves as proof.

How to create a commercial invoice?
 

This is a complete tutorial on preparing a commercial invoice.

• Download a sample commercial invoice template.

First, download and personalise a commercial invoice template suited for your firm. A global invoice template can make it easier to generate invoices.

• Avoid making mistakes while filling the seller's data:

Include any contact information for your business, such as the name and end destination, phone number, and email address.

• Enter the information for customers.

The next step is to figure out how to correctly complete a commercial invoice. Delivering accurate information to the customer or business is possible by utilizing your service. The contact name, end destination, and shipping address must be included if they differ from the billing address. You can also obtain the customs' official address or location.

• Add the unique invoice number.

Bills must be uniquely identifiable using invoice numbers, harmonised tariff codes, or both. Sequential identification is the best approach for numbering bills. The first invoice in the series should be number 001, and so on.

• Add a reference number for the client.

On a commercial invoice, the buyer reference number is provided so that you may identify the customer you are working with in case of a complaint or if the buyer or business wants to contact you.

• Don’t forget to add  Terms and Conditions of Sale

The sale conditions include any information concerning the risks and expenses you and the buyer will incur while doing business. Because the seller's information was revealed in advance, the first agreement on terms of sale will serve as legal proof if the buyer files a complaint about a transaction. However, you must include it in the business billing templates.

• Make clear your payment terms.

To avoid payment difficulties, ensure the consumer understands your payment policies and the terms on the invoice. Your payment terms on the commercial invoice samples will serve as a reminder and can be included in the purchase order, as well as any applicable taxes, customs fees, and total value.

• Include the currency.

Ensure that the receiver understands the purpose of the invoice and the currency in which you wish to collect payment for the total amount. It should have been agreed upon before doing business with the buyer to avoid misunderstandings or payment delays. 

• Mention the delivery mode.

Your commercial invoices must describe how you will deliver the goods to your client, whether by land, air, or ocean.

• Note the amount.

Your business invoices should include product information such as the quantity purchased, the cost per unit, and the shipment's gross weight.

• Clearly State Your Products.

The billing document must provide a detailed description of each item sent. This invoice should include the proper measurements and names of the products, the types of packaging they will be transported in, the kinds of containers they will be stored in if necessary, and their gross weight, unit price, and quantity.

• Add the Measuring Unit.

Each component's weight and total net weight should be reported in the same unit of measurement.

• Add the cost and value.

Record the total selling price of all items sold in the shipment and the cost per commercial unit.

• Note Container markings

The company invoice form should include a note regarding any markings or symbols on the shipping details. If there are multiple boxes or shipments, you can assign them names and labels that make sense to the client.

• Add on extra expenses.

Include a packing list and detailed descriptions of any additional expenses on the invoice form.

Difference between Pro-forma invoice and Commercial Invoice
 

Difference between Tax invoice and commercial invoice
 

FAQ

What is included in commercial invoice?

A commercial invoice should include the seller's and buyer's contact information, a description of the goods being shipped (including quantity, value, and harmonised tariff code if applicable), shipping terms (Incoterms), payment terms, and any other information required for customs clearance and payment processing.

Why is a Commercial Invoice Necessary for International Shipments?

A commercial invoice is more than just a legal document that verifies the buyer-seller transaction. It's a shield that guards your interests. Customs authorities are responsible for assessing duties and taxes, determining the value of commodities, and ensuring compliance with import restrictions. It also simplifies payment processing and serves as a reference for resolving disputes between parties, ensuring that your organisation is secure and protected.

How Should I Prepare a Commercial Invoice for International Shipments?

When creating a commercial invoice, be sure that all information is correct and matches other shipping papers. Use clear and concise wording, and provide any necessary documentation or certifications, such as certificates of origin or inspection certificates. It is also critical to adhere to any special formatting or regulatory requirements of the destination country. To make the procedure more effective and convenient, consider using electronic formats or online platforms for faster processing and tracking, enabling you to concentrate on other elements of your organization.

What is commercial invoice for samples?

A commercial invoice for samples is a document used in international trade to declare the value and type of samples being shipped from one country to another. It serves as proof of the transaction and includes information required for customs clearance.