Understanding the Role of a Commercial Invoice in International Trade

International trade requires precise documentation and management. A key component of this documentation is the commercial invoice. Companies that regularly ship goods across borders must ensure that their commercial invoices are correctly and comprehensively filled out to avoid delays and additional costs. In this guide, you will learn everything you need to know about commercial invoices, including their importance, how to fill them out correctly, and the differences from other customs documents like the CN22/CN23 form.

What is a Commercial Invoice?

A commercial invoice is a central document in international trade. It serves as a contract and receipt between the seller and the buyer and is used by customs authorities to determine duties and taxes. A commercial invoice contains essential information about the transaction, including descriptions of the goods, their quantities, prices, and total values. It acts as a legal document and helps to avoid misunderstandings and disputes between trading parties.

A real-life example demonstrates the importance of the commercial invoice: A British machinery manufacturer exporting products worldwide must ensure that their commercial invoices are accurate to avoid delays at international customs and to ensure smooth delivery to their customers.

How Do I Correctly Fill Out the Commercial Invoice?

Correctly filling out a commercial invoice is crucial for the success of an international shipment. The following information should always be included:

• Complete contact information of the seller and buyer: Names, addresses, and contact details.
• Date and invoice number: Unique identification of the invoice.
• Description of the goods: Detailed information about the products being shipped, including quantity, unit price, and total price.
• Delivery and payment terms: Information on Incoterms and payment terms.
• Country of origin and destination: Details about the country where the goods were produced and the destination country.
• Transport details: Type of transport and any relevant transport numbers.

A practical example: A medium-sized company in the Spanish exporting spare parts for machinery to Brazil uses a precisely filled-out commercial invoice to ensure that Brazilian customs authorities quickly clear the goods, avoiding additional costs or delays.

When Do You Need a Proforma Invoice?

A proforma invoice is a preliminary invoice commonly used in international trade to give the buyer an overview of the upcoming transaction. It is often used to apply for import permits, financing, or to provide a cost estimate for the buyer. While not legally binding, a proforma invoice includes much of the same information as a commercial invoice but is used for different purposes.

For example, a Italy-based exporter of electronics might issue a proforma invoice to a potential customer in Japan to outline the cost and details of the proposed sale. This document helps the Japanese customer to apply for import permissions and secure the necessary funds for the purchase.

How to Create a Commercial Invoice

Creating a commercial invoice involves several steps to ensure it is accurate and comprehensive. Here is a step-by-step guide:

• Start with a Template: Using a commercial invoice template can streamline the process and ensure that all necessary information is included. Many online resources offer free or customizable templates.
• Enter Seller and Buyer Information: Fill in the complete details of both parties, including company names, addresses, and contact information.
• Include Invoice Details: Add the date of the invoice and a unique invoice number for tracking purposes.
• Describe the Goods: Provide a detailed description of the goods being shipped, including quantities, unit prices, and total values.
• State Delivery and Payment Terms: Clearly define the terms of delivery and payment, referencing relevant Incoterms.
• Specify Transport Information: Include details about the mode of transport and any relevant tracking or shipping numbers.
• Calculate Totals: Ensure that all calculations are correct and that the total amount due is clearly stated.
• Add Signature and Date: Sign and date the invoice to certify its accuracy and completeness.

Differences Between a Commercial Invoice and CN22/CN23 Forms

While commercial invoices and CN22/CN23 forms are both used in international shipping, they serve different purposes and contain different information.

• Commercial Invoice: Primarily used for transactions between businesses and for customs clearance. It includes detailed information about the sale and shipment.
• CN22/CN23 Forms: These forms are used specifically for postal shipments and are required for packages sent via mail. They provide a simplified version of the commercial invoice, focusing on the nature of the goods, their value, and the sender and recipient information.

For instance, a UK-based e-commerce company sending a small parcel to a customer in Australia would use a CN22 form for postal clearance, while a large shipment of goods sold to an Australian retailer would require a full commercial invoice.

Commercial Invoice for Customs

A commercial invoice is crucial for customs clearance. It provides customs authorities with the information they need to assess duties and taxes and to clear goods for entry into a country. Accurate and complete commercial invoices help to expedite the customs process and avoid delays and additional costs.

Consider a UK-based textile manufacturer exporting fabrics to the United States. The commercial invoice must accurately describe the goods, including their value and origin, to ensure that US customs can correctly classify and clear the shipment.

Conclusion: How Gerlach Can Help

Gerlach, with over 140 years of experience in customs services, offers comprehensive support for businesses dealing with international trade. They provide expert advice on creating and managing commercial invoices, ensuring compliance with customs regulations, and optimising logistics processes. Their digital customs solutions and specialised services help companies navigate the complexities of international trade smoothly and efficiently.

For more information on how Gerlach can assist your business with commercial invoices and other customs procedures, visit their website at Gerlach Customs.