What To Include In A Commercial Invoice?
There is no standard format for a commercial invoice. However, there are certain requirements that a commercial invoice must include, such as specific information about the parties involved in the transaction, the goods being transported, the country of manufacture, Harmonised System Codes for the goods involved, etc. The following items are examples of what needs to be included in a commercial invoice:
Complete Name and Address Details of Both the Shipper and Consignee
This section of the Commercial Invoice includes full details of the shipper (seller) and the consignee (buyer). It includes the contact name, address with postal code and country, and the tax ID of the shipper as well as the consignee.
Contact Number of Both Shipper and Consignee
Much like the details mentioned above, you need to specify the contact number of both the shipper as well as the consignee on the commercial invoice.
Terms of Sale (Incoterms)
Terms of Sale, also known as Incoterms, are the billing terms specified on the commercial invoice. These terms specify which party (seller or buyer) is responsible for paying various costs such as shipping, insurance, import tax, and duty charges.
Incoterms are widely used terms of sale and are a collection of eleven individual rules that are recognised internationally.
These rules specify the responsibilities of both the buyers and sellers with regard to insurance, shipment, customs clearance, documentation, and other logistical activities.
Reason For Export
In this section, the shipper (exporter) specifies the reason or why he is undertaking such an export. For instance, he would specify if the shipment is a gift, a sale, an item for repair, etc.
A Complete Description of The Items
In this section, the shipper needs to provide a complete description of the items that form part of the shipping transaction. For example, the details with regards to the shipping items could include:
- What item is it?
- What material is the item made of?
- What is the item used for?
- Item’s Serial or Part Number if applicable
These details provided by the shipper are used by the importing country’s brokerage department to determine the import duty and the taxes on the goods that form part of the shipping transaction.
Harmonised Tariff Codes (If Known)
Harmonised Tariff Codes are the codes that are used to classify and define internationally traded goods. The shipper needs to provide this information to help the customs department in the clearance of the goods.
This is a system that is used by customs authorities across the globe to identify the product so as to determine the duties and taxes. Therefore, providing these details helps to avoid any delays and additional charges.
Country or Territory of Origin of the Commodity
Country of Origin is the country where the items in question are manufactured, produced, or grown.
Thus, it is the country of manufacture of imported goods and not the country from where the items are shipped.
For example, goods manufactured in France are shipped from Germany. Thus, in this case, the country of origin is France and not Germany.
Furthermore, if any work has been carried out on the items in a transaction in another country before the import of such goods, such work must change the items significantly for that country to be called the country of origin.
Number of Units, Unit Value, and Total Value of Each Item
The unit of the item deals with the item quantity, that is, the number of individual items that are being shipped. The number of units of an item could be specified in various units of measurement depending upon the nature of the item to be shipped. For instance kilogram (Kg).
Unit Value, on the other hand, is the cost or the purchase price per unit item. For example, 20 notebooks at $5 each.
Likewise, the Total Unit Value is the combined value of all the items included in the shipping transaction. For example, 20 notebooks at $5 each have a Total Unit Value of $100.
Number of Packages and Total Weight
As the name suggests, the Total Number of Packages is the number of packages that form part of the shipping transaction.
Likewise, the total weight in kg (kilograms) or lbs (pounds) is the shipping weight including packaging.
Shipper’s Signature and Date
This section includes the signature of the shipper, certifying that the information provided in the commercial invoice is correct. In addition to this, the shipper needs to specify the date on which the sale took place as per the records maintained by the shipper.
Remember, providing the correct date of sale or transaction becomes all the more important when goods are bought under a Letter of Credit.