What Role Do Commercial Invoices Play in Export?

As exporters, you know that document management is critical to exports. Different types of export invoices have varied roles. The proforma invoice confirms export commercials.

The commercial invoice for export plays numerous roles. It is used to clear customs, file taxes, collect payments, access trade finance solutions, and more. This article will focus on commercial invoices' various roles throughout the export process.

What is a commercial invoice for export?

In exports, the commercial invoice is a legal document that provides proof that the sale has taken place between the exporter and the importer. It includes all the details about the products being sold and shipped, including the value, quantity, and terms of payment, which the customs authorities will use to calculate the import duties and taxes.

What is the purpose of the commercial invoice in export?

As stated above, the commercial invoice is an integral part of export, and it is essential to create it with care and save it in your records securely to enable authorized access as required.

Contract

The commercial invoice proves the sale occurred between the importer and the exporter. It is essentially a contract in which the exporter promises to send goods as described in the invoice and agreed upon. It is also a contract that the importer will make payment as described in the invoice once the goods have been delivered as promised.

Supporting document for regulatory authorities

The commercial invoice is a document that provides information that customs and other regulatory authorities need to check and assess the applicable taxes and duties.

Clearance and transportation

The commercial invoice will help the importer take charge of the goods from the shipping company and move them to other modes of transport as required. It will also provide proof of import at various toll stations and clearance posts.

Payment processing

The commercial invoice will also act as the means to process the payment from the importer’s bank to the exporter’s bank. It will clearly state the terms of sale and enable clearance when it is time to collect the dues.

What information must be included in the commercial invoice?

As the commercial role plays multiple roles in the export process and aids the importer’s journey, it is essential to capture the correct details in this document. Let’s take a look at what this entails.

Details of the exporter and importer

Adding the details of the exporter and importer, like the name, type of business entity, contact details, tax details, and contact person, seems logical. Still, this information is often overlooked or incomplete. When preparing the commercial invoice, it is a good idea to make a checklist of all the details to be included and ensure all details are correct.

Invoice details and shipping information

Add a unique invoice reference number for tracking, the issue date, the purchase order (PO), and the agreed-upon payment terms, such as the advance, Letter of Credit, and Incoterms. The Incoterms determine whether the seller or buyer is responsible for costs, risks, logistics, and transportation modes.

Complete details of the product

The invoice should include accurate and detailed information about the exported goods. Add the correct Harmonized System code, which is the international classification used to calculate tariffs. Add the quantity with precise details of the weight or volume and the number of units. Include cost per item, total value, and the currencies for payment.

Other information

Under this section, you can add details like the country and region where the items were produced, special information on handling the goods, certifications, if any, and the exporter’s signature and stamp attesting that all details are correct.

What are the crucial aspects of the commercial invoice that should be checked?

Here’s a list of information in the commercial invoice that is critical and must be checked before signing off on the document:

Harmonized system codes to ensure smoother customs clearance and correct duties Complete buyer details to avoid delivery or payment-related issues Clear and precise incoterms so that there’s no confusion about cost responsibilities Proper currency details to ensure the buyer knows and accepts the transaction currency

Here’s a generic sample of a commercial invoice

This is an indicative commercial invoice template that exporters can use. However, you can make changes according to your requirements.

The essence of ensuring compliance with export business lies in efficient document management to meet regulatory requirements, regular inflow of funds, and access to finance options. LeRemitt offers you innovative solutions for all three aspects with Document Management and Inward Remittance platforms along with Trade Finance solutions.

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