If you run a small business that exports goods to foreign countries, it’s essential to learn how to create a commercial invoice. When you sell products outside of Canada, you’re required to fill out specific documents to facilitate customs clearance. The duties and taxes are calculated during the customs process.

Read on to find out what a commercial invoice is, when you need one, and how to create one. 

What is a commercial invoice for shipping? 

A commercial invoice is a customs document used when shipping goods internationally. It’s essentially a legal agreement between the seller (the exporter) and the buyer (the importer). 

A commercial invoice also includes detailed information that a customs inspector needs, such as the items sold and the amount due to the seller. The foreign buyer relies on this paperwork to prove that they own these products and to facilitate payment through their bank.

Why do you need a commercial invoice? 

A commercial invoice is required when you ship commodities internationally that have commercial value. It’s also used when the cargo passes through customs clearance when it arrives in the destination country. 

Here are the common uses of commercial invoices: 

• They outline the items purchased (from the buyer) and sold (from the seller). 
• The buyer uses this document to make a payment for the goods purchased.
• The customs officer reviews this paperwork to clear the goods through customs.
• The commercial invoice is used as a supporting document if the buyer files an insurance claim (such as for missing or damaged goods). 
• Governments estimate the actual value of the goods for duties and customs clearance.

When is a commercial invoice needed?

For shipping products internationally that have commercial value, a commercial invoice is typically required if your shipment is valued at $500 CAD or more. 

Typically, non-document goods are deemed as commodity shipments, which means a commercial invoice is required. On the other hand, written or typed documents are deemed classified documents, which do not require a commercial invoice. 

How do you create a commercial invoice?

Given that a commercial invoice serves as an essential document for your international shipment, it’s important for business owners to learn how to complete one. Here are 6 simple steps to create your own commercial invoice. 

Step 1: Download a commercial invoice template

You can find a commercial invoice template from various reputable couriers or customer brokers. We’ve designed a blank commercial invoice that you can download and fill out. It’s simple and easy to use. 

Alternatively, the Canada Border Services Agency provides the Canada Customs Invoice, which can also be used as a commercial invoice. 

Step 2: Provide details about the shipment

When you begin filling out the form, you’ll need to include important details about your delivery. Here are the fields you’ll be required to complete:

• Invoice number: Select a unique invoice number, which is usually in a sequential numeric format. For instance, Invoice #101, #102, #103. 
• Customer reference number: Adding a customer reference number is useful for your buyer should they need to contact your company with inquiries about their order. 
• Terms of sale (known as Incoterms): Indicate the buyer's or seller's responsibilities. This may include who’s paying the various costs, such as shipping, import tax, duties, and insurance.
• Currency of sale: Specify the currency that has been agreed upon to pay for the order. In most cases, it will be in the currency of the seller’s country. So if you’re selling goods from Canada, the currency will be in Canadian dollars.
• Terms of payment: Outline the terms and conditions. This is normally agreed upon when a purchase order or pro forma invoice is issued.
• Mode of transportation: Stipulate the shipment method, such as by sea, air, ground, or rail. 
• Country of origin: This is where the goods were manufactured. For example, products produced in North America are exempt from duties and taxes under the Canada-United States-Mexico Agreement.
• Harmonized System code (if known): These codes categorize your goods and are used by customs authorities to identify the type of product you’re shipping so they can calculate duties and taxes. Providing this info can help prevent delays during customs clearance. 

Step 3: Fill in the contact information 

You’ll need to include the business information for you (the sender) and the consignee (the receiver). Be sure to include the company name, contact person, address, phone number, and email address.

Step 4: Describe your items 

In this section, you’ll want to provide a complete description of your goods. It should include the following information:

• Number of packages 
• Type of packaging
• Description of goods 
• Quantity
• Unit of measure 
• Unit weight and total weight (in kilograms) 
• Unit value (the price of each unit)
• Total invoice value (quantity x unit value)

Step 5: Include additional costs 

Write down the extra charges the customer needs to pay. This may include packing, freight, and insurance costs. 

Step 6: Provide your signature and date

The final step is to double-check that your form is filled out correctly. Once you’re confident that everything looks good, sign and date the invoice. 

Streamlining your shipments

If your business exports goods regularly, having a commercial invoice template is handy. That way, you can save time and easily fill in the information for every shipment. Once you’ve set up your shipping process, it can help open doors to the global marketplace so you can grow your sales. 

Be sure that your commercial invoice is filled out correctly each time to ensure your shipment experiences smooth sailing. By doing so, you can have a smoother customs clearance process and satisfy your customers with timely delivery.

You can create commercial invoices efficiently with QuickBooks Online. We offer custom invoice templates so you can simplify your invoicing process. Try it today. 

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