Whether you need to learn the basic meaning for what is the commercial invoice, or you have any advanced problem for the commercial invoice, this FAQ guide will definitely help your export or import business.
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- What is the commercial invoice?
- When is the commercial invoice required?
- Does the commercial invoice somehow relate to commercial documents?
- How a proforma invoice and commercial invoice differ between each other?
- Can the commercial invoice be handwritten?
- How do I create a commercial invoice?
- Which obligatory details should the commercial invoice contain?
- Who can issue the commercial invoice?
- Commercial invoice and tax invoice: what is the difference?
- How many commercial invoice copies are allowed?
- What is consignee in the case of the commercial invoice?
- What is the HS number on a commercial invoice?
- How to figure out the commercial invoice number? Why do I need it?
- Are there some general rules on how to fill the commercial invoice?
- Where do you put a commercial invoice?
- Where can I get commercial invoice templates?
- Where can I find legal requirements for the commercial invoice?
- Commercial invoice vs packing list: how are these two differ?
- Do I need a commercial invoice to ship documents?
- Are there some special commercial invoice requirements for China/USA/UK/Canada/other countries?
- What kind of product description should the commercial invoice contain?
- Do I need a commercial invoice for personal items?
- Is a commercial invoice the same as a bill of lading?
- Can one commercial invoice be used for multiple exporting products?
- How the commercial invoice and bill differ between each other?
- How to get the commercial invoice from Aliexpress sellers?
- Does the commercial invoice have to contain payment terms?
- Do I have to use the commercial invoice for returned goods?
- What is the difference between the commercial invoice and the shipping invoice?
- Is the commercial invoice also used when dropshipping?
- Why do some Chinese suppliers under-declare the total value in the commercial invoice during export?
- What are the consequences of having a commercial invoice and normal invoice with different totals due to free of charge items shipped?
- What is the Purpose of Commercial Invoice?
- What are the different types of commercial invoices available?
- What is the Step by Step Process of making a Commercial Invoice?
- Is a Commercial Invoice the same as Customs Invoice?
- Does Commercial Invoice need a Value?
- How does Commercial Invoice compare with other Types of Invoices?
- What is No Commercial Value Invoice?
- What is the Terms of Sale in Commercial Invoice?
- How do you Show Discounts on Commercial Invoice?
- Is Commercial Invoice Mandatory in International Shipping?
What is the commercial invoice?
A certain set of documents is always required for customs clearance of all kind of goods.
One of the most important of these documents is the commercial invoice.
A commercial invoice is a paper that the exporter (seller/supplier) must send to the buyer along with the goods being shipped.
When is the commercial invoice required?
Commercial invoice plays an important role not only in buying and selling goods.
It is also one of the indispensable documents for passing customs control at the borders of many countries as well as for individual territorial units with special trade legislation, like some US states.
The invoice is used as a declaration and is provided by the person or corporation that is exporting the item.
The key to smooth and fast customs clearance is a complete and correct commercial invoice.
Does the commercial invoice somehow relate to commercial documents?
Commercial document definition includes the next significant trading documents:
- Commercial invoice.
- Shipping or transport document.
- Certificate of origin.
How a proforma invoice and commercial invoice differ between each other?
A proforma invoice is a document that contains preliminary data on the goods which would be delivered in the future (for example, its quantity or price).
A proforma invoice is a basis for issuing a final invoice or a commercial invoice.
Also, a proforma invoice is usually written out if the goods are delivered on a partial prepayment or free of charge (humanitarian aid, promotion goods, etc.).
The difference between the proforma invoice and the commercial invoice is that some of the data in the first document is not final and can still be changed before the final agreement on the delivery.
For example, this may relate to the number of goods or types of models.
Can the commercial invoice be handwritten?
According to the general international rules, commercial invoices have to be typed and not handwritten so the inside information is not confused by anyone because of illiteracy or bad handwriting skills.
How do I create a commercial invoice?
The use of various formats of commercial invoice is allowed.
The most common is the corporate invoice of the seller on its letterhead.
If the sender does not have a corporate invoice on letterhead, he can print the information on a regular sheet of paper.
When creating the corporate invoice, first of all, you have to build up the right form, which will contain all the needed information fields.
We will discuss all the obligatory parts of the commercial invoice later in this FAQ.
Which obligatory details should the commercial invoice contain?
The seller (supplier) has to prepare the commercial invoice which must contain the following information:
- date of issue and invoice number;
- personal info (name, address) about the supplier;
- details of the consignee (buyer, recipient);
- information about the contract (number and date of conclusion);
- the product name, description of each type (model, article);
- the number of units;
- price per unit of cargo;
- the total cost of goods;
- HS code of cargo;
- weight of products;
- the currency which was used while buying goods;
- the total value of the entire batch of goods sent;
- information about the country of origin, the country of export (if it is not a manufacturer);
- recipient country;
- the purpose of exporting the goods;
- VAT (may not be mentioned if the tax is zero);
- terms of delivery according to Incoterms 2010.
Who can issue the commercial invoice?
A commercial invoice should be created by the seller, supplier or exporter.
In general, commercial invoices are printed on a company letterhead paper of the supplier.
It is also should be stamped and signed by the same company.
Any alteration or correction on any of the shipping document must be authenticated by the issuer of the document (in the vast majority of cases it is a supplier or an exporter company).
Commercial invoice and tax invoice: what is the difference?
As it was said earlier in this FAQ, a commercial invoice is the supplier’s bill of sale for the goods, specifying their type, price, and quantity, as well as other terms of sale.
Tax invoice is a document issued by a supplier which stipulates the amount charged for goods or services as well as the number of Goods and Services on which tax payable.
In the better part of countries, a commercial invoice can be raised by any supplier meanwhile a tax invoice could be given by a registered dealer may be service tax provider.
How many commercial invoice copies are allowed?
In practice, the supplier has to create two copies of the commercial invoice and store one of them inside the package.
The other copy has to be placed outside the package, in some kind of transparent envelope to protect the paper from tearing and ripping.
On the supplier’s desire or buyer’s demand, the commercial invoice can be translated into the national language of the destination country but the copy in the supplier’s national language should be also added to the package.
Also, some shipping companies can require more copies of the commercial invoice, especially in the case of multiple packages.
What is consignee in the case of the commercial invoice?
Consignee is a private person or a company (named in the commercial invoice) to whom goods are shipped.
What is the HS number on a commercial invoice?
HS stands for Harmonised Commodity Description and Coding System.
It’s a list of digits used by customs in various countries to classify goods.
It is mainly used to determine the taxes and duties which has to be paid.
An HS code can be also named as a harmonized, tariff or commodity code. You can check this FAQ Guide on HS Code.
How to figure out the commercial invoice number? Why do I need it?
In general, you can see the field with the commercial invoice number at the top of the paper.
This number can be used by suppliers to sort orders from their clients and add this info in their accounting documents.
Are there some general rules on how to fill the commercial invoice?
Even though the form of the commercial invoice can’t be found in any legal documents, there are still certain requirements that must be followed.
If there are doubts about the correctness of filling out the invoice, it is better not to rely on your strength and turn to the services of a specialist in this matter.
- The commercial invoice is issued on a standard A4 sheet, but preferably on a special letterhead of the supplier: this is more convenient since such sheets already contain all the necessary details of the seller.
- The document has to be filled in printed form.
- The invoice is certified only by the personal signature of the person responsible for sending the goods.
- The invoice costs are usually expressed in the currency specified in the contract. Otherwise, it is obligatory to indicate at what rate (indicate the date of transfer) the conversion will be carried out.
- The document is filled in a language understandable for both parties to the transaction, most often in English. The practice of bilingual filling of the document is now successfully used (in the languages of the supplier and the recipient, divided into two columns).
- If the goods are not sent for commercial purposes, the reason for their movement must be indicated. For example, “This product is not for commerce. Payment is not required” or “Replacement of defects. Cost is indicated only for customs clearance”, etc.
- If insurance and transportation are paid by the sender, their cost is indicated in the invoice in a separate field.
Where do you put a commercial invoice?
Copies of the commercial invoice have to be placed both inside and outside the package.
Where can I get commercial invoice templates?
There are tons of commercial invoice templates on the Internet.
Where can I find legal requirements for the commercial invoice?
There are no general international requirements in the case of commercial invoice form.
However, you can contact your state customs authorities and ask them about this kind of document (in some countries the form of the commercial invoice could be found in customs legal acts).
Commercial invoice vs packing list: how are these two differ?
A commercial invoice and a packing list are both documents which describe transactions in which some goods and products change the owner.
However, there is still a slight difference: the packing list is needed to describe the goods themselves, while the commercial invoice shows details about the financial transaction which stands behind the transfer of such goods.
So, the main reason why the seller can use a packing list is to describe the goods, so that the supplier can show what exactly he has been sending and the buyer can check that all those goods have been received later in full.
The commercial invoice is simply needed to show the buyer how much and when he has to pay for desired products.
A commercial invoice contains information about the payment process, e.g. prices and terms, such as whether payment has to be issued immediately or in 30 days.
Do I need a commercial invoice to ship documents?
A document can be defined as a typed, handwritten, or printed communication which has no commercial value.
When you ship international documents you only need to complete a shipping label.
In general, the commercial invoice is not required for documents shipping.
Are there some special commercial invoice requirements for China/USA/UK/Canada/other countries?
Yes, the special requirements for the commercial invoice form can slightly vary from one country to another.
The main difference lies in the HS Code, which is not the same in the US, Europe, and Canada.
Also, some states may have a special requirement in the case of the commercial invoice form, which has to be completed following special rules of customs authorities.
Such invoices are known as Customs’ invoices and may be provided instead of or in addition to the standard commercial invoices.
What kind of product description should the commercial invoice contain?
The description of each product must include a specific list of information, the completeness of which determines the time for the cargo to pass through customs control and, as a result, the possibility to meet delivery deadlines.
In this part of the invoice you need to specify:
- product name;
- the scope of the product;
- serial numbers, tariff number (if available);
- production material;
- the number of units of production;
- type of product packaging;
- weight and volume;
- units of measure (kg, pieces, etc.);
- price for one unit;
- the total value of cargo.
A complete description of the cargo is the main requirement for its successful delivery to the destination.
Do I need a commercial invoice for personal items?
If you are sending personal items or a gift, a pro forma invoice, rather than a commercial invoice will be needed, because there is no purchase happening in such cases.
Is a commercial invoice the same as a bill of lading?
A bill of lading is not an accounting document.
It is a document which shows how the title to goods is passing from the shipper to the consignee.
Can one commercial invoice be used for multiple exporting products?
Yes, you can use a single commercial invoice if all the products are needed to be sent to the same destination.
Don’t forget to place a copy of a commercial invoice on each package.
How the commercial invoice and bill differ between each other?
In practice, commercial invoices are sent to customers after the goods are shipped.
Nowadays, original paper-based invoices can be replaced by electronic ones.
Bills are received from vendors.
They record expenses (or costs or inventory), and they record that the business owes the vendor the amount of money that appears on the bill.
Speaking of the difference between the commercial invoice and the bill, it lies in the fact of the shipment: commercial invoices contain a lot of shipping info while bills describe only goods and their cost.
How to get the commercial invoice from Aliexpress sellers?
Not all Aliexpress sellers provide their buyers with commercial invoices.
However, you might need such documents while importing goods from China.
So what to do in such a situation?
First of all, you can always try to ask Aliexpress seller about the possibility of sending you an invoice.
If this method hasn’t helped you, you can use some side Web programs for this.
For example, you can try to use the Aliexpress invoice generator.
Does the commercial invoice have to contain payment terms?
Yes, the commercial invoice has to contain payment terms and it is the main difference between this type and other types of invoices.
Do I have to use the commercial invoice for returned goods?
Just like in the case of personal items or gifts, for the goods return process, you have to use a pro forma invoice because there is no need of paying for such products.
What is the difference between the commercial invoice and the shipping invoice?
A shipping invoice shows how the goods are moved to their final destination, while a commercial invoice allows the supplier to bill the buyer for such goods.
Is the commercial invoice also used when dropshipping?
Yes, you have to use commercial invoices for dropshipping as well.
Why do some Chinese suppliers under-declare the total value in the commercial invoice during export?
The main reason why Chinese suppliers can under-declare the total value of goods is to reduce buyers cost.
Between the US and China, the general tariff was 0 until in 2019 Donald Trump changed it.
So in the case of US buyers, it is totally unnecessary to under-declare value from the recent time.
As a rule, the better part of Chinese suppliers will follow the instructions from foreign buyers to make documents for passing through the customs clearance process only.
In some cases, foreign buyers can even prepare the customs documents with lower cost by themselves and send them to Chinese supplier to print, stamp and send to shipping entity.
What are the consequences of having a commercial invoice and normal invoice with different totals due to free of charge items shipped?
None that we can think of.
In accounting terms, the only document which matters is the commercial invoice because it shows the money that was paid as a result of the foreign purchase.
In the case of logistics, a commercial invoice is a customs declaration paper which is used to calculate customs and duty charges when transporting goods across international borders.
Outside this use, it serves no other purpose.
What is the Purpose of Commercial Invoice?
Commercial invoice plays a fundamental role in facilitating trade, especially across international borders.
You can use this document in a wide range of circumstances related to shipping process.
Some of the uses of commercial invoice include the following;
· Outlining Commodities
Both the buyer and the seller use a commercial invoice to list all the goods being bought and sold, respectively.
Ideally, this document outlines all the items involved in the specific transaction.
Of course, this is essential since it helps to enhance accountability and inventory management.
· Sending Funds for Shipment Payment
In most instances, traders involved in large scale importation often use a commercial invoice to facilitate goods payment.
Ordinarily, the buyer, upon receiving the document, sends it to a particular bank or respective financial institution.
Upon scrutiny and verification of all the vital details, the bank then remits the payment to the respective seller’s account.
· Acts as a Support Document for Claims
In international shipping, several risks are always in the offing.
For instance, the shipment may get lost or damaged due to varied reasons.
In such instances, if the consignment is insured, it means the buyer will make claims from the insurance provider against the goods.
Therefore, the commercial invoice serves as an ideal support document in the insurance claim to compensate accordingly.
· Customs Clearance
In many countries, a commercial invoice is one of the primary documents required for customs clearance.
Technically, the customs officials look into the document to verify the goods match with the cargo.
It also helps in determining whether the goods are prohibited or restricted before subjected to physical inspection if need be.
· Helps to Evaluate Actual Payable Tax and Duties
Most governments, through appointed departments, use commercial invoices to calculate the actual payable taxes and duties.
Different goods are subjected to varied duty or tax brackets, depending on a wide range of factors.
While at it, some commodities are also exempted from tax.
Thus, the commercial invoice makes it easy to determine the true value of goods for customs and duty.
What are the different types of commercial invoices available?
Typically, a commercial invoice can be divided into two main categories, which include the following;
· Purchase Invoice
This refers to a type of commercial document that the seller issues to the buyer.
A purchase invoice outlines the commodities purchased or services offered.
This document also includes the number of items sold and the sale price.
The purchase invoice is used to demonstrate proof that the product or service was purchased and the amount paid for the same.
· Sales Invoice
It refers to the type of commercial invoice that the seller, manufacturer, or exporter sends to the customer to request payment for items.
A typical sales invoice includes a product description or the product being sold or the service being offered.
Furthermore, the sales invoice also serves as an official record for a sale for both the buyer and seller.
What is the Step by Step Process of making a Commercial Invoice?
Most suppliers often have customized templates of commercial invoices, which reflect their respective businesses.
It is important since it makes it easy for the business to fast-track and generate the invoice.
However, for a new business, there is also a way you can use to make this document when in need.
Here’s a step-by-step process on how to generate a commercial invoice;
1) Download the Template
The easiest and fastest means of building a commercial invoice is by downloading a template you can customize.
While at it, ensure you obtain it from a reputable website.
2) Fil in Seller Details
Fill in all the relevant details regarding your business. These include business name, address, email address, and phone number.
3) Fill in Buyer Details
Ensure you include the name, address, and contacts of the individual or entity purchasing the commodities.
You’ll also want to include the shipping address in case it is different from the billing address.
4) Assign Invoice Number
The invoice number must be unique, which makes the commercial invoice autonomous from any other similar document.
A suitable way of assigning invoice number is by using a sequential method.
Where possible, you may consider making the invoice number alphanumerical.
5) Include Buyer’s Reference Number
In addition to the invoice number, you may also want to incorporate a customer’s reference number.
The buyers may use this reference number in case they have inquiries to make to your business regarding a particular concern with the order.
6) Incorporate Terms of Sale
Detail the terms and conditions surrounding the sale of specific commodities.
Technically, this refers to any information related to the obligations, costs, and risks that both parties take on as part of sales of items.
Ensure the terms are brief and straight to the point.
7) Include Terms of Payment
Provide clear terms of payment.
This will include vital information concerning the agreed payment terms and conditions for both parties.
Ideally, you’ll always have such details worked out as part of a purchase order for the sale.
8) Determine the Currency
This is a critical step, particularly when dealing with an overseas buyer.
Ensure you include the specific currency on the commercial invoice. Moreover, the buyer must agree to use the identified currency for the sale.
9) Determine Shipment Method
Indicate the specific ways your products will be shipped to the buyer.
It could be via airfreight, ocean freight, or express shipping among others.
10) Include the Item Description and Quantity
Provide a complete description of all the commodities to be shipped.
Essentially, this includes a type of container, gross weight, and unit price of the merchandise.
Furthermore, detail the total quantity of every product to be purchased and shipped.
11) Provide a Unit of Measure
Give the total gross and net weight of every commodity to be shipped.
This should be expressed in kilograms, tonnes, or pounds, depending on the country of origin or destination.
Make sure you include the unit price of the commodity per unit measure.
12) List Price and Value
Provide the total price for the shipment and list the net commercial value.
Of course, this is the total value of all the commodities covered on the invoice.
13) Detail Miscellaneous Charges
Note down any extra charges you expect the customer to pay as part of the consignment of the shipping process.
This may include insurance, storage fee, etc.
In a nutshell, this is how you can generate a commercial invoice when in need of one.
Is a Commercial Invoice the same as Customs Invoice?
The key difference between a commercial invoice and a customs invoice is the specific setting where one is used.
For instance, a commercial invoice is used in domestic and international purchases and sales of different commodities.
However, in foreign trade, a commercial invoice is used as a customs invoice.
Primarily, a customs invoice is a legal document transported together with a shipment needed for customs clearance.
Another difference between these two types of invoices is that customs invoice may be a bit detailed.
Nonetheless, they both serve the same purpose irrespective of the setting or circumstances used.
Does Commercial Invoice need a Value?
Before shipping your consignment, you need to determine the value for each commodity.
Essentially, one of the main reasons for this is to specify a value for the carrier you are using to ship the consignment in case of loss or damage.
Another reason is to help in calculating the customs duty and taxes to pay when shipping internationally.
Nevertheless, the commercial invoice includes consignment value for customs of the designated country to sign duties and taxes accordingly.
Technically, the value on this document should be the price the buyer paid for the goods.
However, the seller can assign a lower value on commercial invoice if they are providing a sample at no cost.
How does Commercial Invoice compare with other Types of Invoices?
Typically, a commercial invoice intends to provide records of a business.
In general, the country of destination reviews this document before allowing a consignment into the country.
A commercial invoice is quite unique compared to other types of popular invoices such as the following;
· Standard Invoice
It is relatively basic and contains an invoice number and other vital information about the buyer and seller.
This type of invoice also contains an itemized description of commodities of services, cost, payment terms, and due dates.
· Progress Invoice
Commonly used in construction industry, a progress invoice is merely incremental detailing the progress of long-term projects.
In essence, it makes it easy to know the amount they presently owe the supplier or service provider.
· Utility Invoice
A type of invoice specifically utilized by companies such as electricity, water telephone, internet, and sewerage.
Utility invoices note the different details relevant to the service, billing period, previous balances, and past due balances.
· Recurring Invoice
It refers to the type of invoice generated every month for the same products or services.
Recurring invoice is common in leased or rented equipment or for services provided on an on-going basis.
· Purchase Order
This document contains details similar to those found in a commercial invoice.
However, it is the buyer that issues a purchase order hence serving as an offer to the seller.
Time-sheets are types of invoices used mainly by independent service providers such as lawyers, tutors, consultants, etc.
In many instances, such service providers often charge on an hourly basis hence use this type of invoice to track the timing.
Essentially, it helps to determine the billing for the actual payment.
What is No Commercial Value Invoice?
It refers to the term used to describe the term used in invoices to express the commodity shipped do not necessarily have commercial value.
In international shipping, some importers often require samples from the manufacturers or suppliers.
When the supplier sends the merchandise to the buyer, they will ship it using a no commercial value invoice.
It simply demonstrates that such commodities should not be subjected to any form of duty tariffs.
Moreover, this type of invoice can also be used when transferring inventory with no sale transaction.
What is the Terms of Sale in Commercial Invoice?
Comercial invoice sample
Also known as Incoterms, it refers to the billing terms on the invoice.
Primarily, the terms specify the responsibility of the buyer and seller when it comes to different elements surrounding the transaction.
In most instances, terms of sale in commercial invoices highlight shipping costs, insurance, duty charges, and import tax among others.
Moreover, the incoterms clarify the point at which the commodities change ownership.
Several terms of sale can be incorporated in commercial invoices.
The most important thing is making sure the terms are clear to the buyer to avoid unnecessary contractual issues.
How do you Show Discounts on Commercial Invoice?
Ideally, discounted items can be somewhat challenging when you consider the possibility customs department overlooking the invoice’s discount.
Furthermore, if you offer discounts or coupons in your cart, it may also lead to reconciliation between the order and total value.
The best approach, therefore, is to learn how to fill out a commercial invoice promo code.
Also, you must come up with various ways of determining other expenses such as free shipping and insurance if need be.
Undertaking such expenses works better than discounting on the commercial invoice.
Thus, rather than discounting the unit price on the invoice, come up with such offers to entice your customers.
Is Commercial Invoice Mandatory in International Shipping?
A commercial invoice is a legal document, which must be presented for any type of cross border shipments.
Almost all countries involved in the importation of different goods require the importers to present this document.
Without this document, the customs department will not permit goods to enter the territory of the country.
Failure to produce a commercial invoice for the respective shipments often leads to lengthy hold-ups and shipping delay costs.
In a worst-case scenario, failure to produce the document may also lead to rejection and returning of the shipment to the country of origin.
In simple words, this document is a compulsory requirement when involved in international trade.