After the pro-forma invoice is accepted by the importer, the exporter must prepare a commercial invoice. The commercial invoice is required by both the exporter (to obtain the necessary export documents, to enable the consignment to be exported, to prove ownership and to enable payment) and importer (who require the commercial invoice to facilitate import of goods into the country in question). In exporting, the commercial invoice is considered a very important document as it serves as the starting or initiating document that underpins the rest of the export transactions.
This the first basic and the only complete document among commercial documents for the shipment. Besides fulfilling the obligation under the export contract, the exporter needs this document for a number of other purposes including:
- Obtaining export inspection certificate;
- Getting excise clearance;
- Getting customs clearance; and
- Securing incentives.
Thus, this document is prepared at both the pre-shipment and the post-shipment stages.
In the first place, the commercial invoice is a document of contents that describes details of goods sent by the exporter. It is the statement of an account, which must contain identification marks and numbers, description of goods and quantity of goods.
The second function of the commercial invoice is that it is the seller’s bill given to the buyer. As a bill, it must contain the name and address of the buyer, unit price, amount and authorized signatures with the designation.
Unless required by the buyer, the total invoiced value should be net of any commission or discount; in other words, it should be the realizable amount of goods as per the trade terms. Sometimes a contract requires a detailed breakup of the amount to be recorded on the invoice for enabling the customs authority in the importing country to calculate import duty.
The following details should appear on the commercial invoice:
- The document title should clearly state “Commercial Invoice”;
- The name of the exporter (referred to as the shipper) and their contact details(tel, fax, cell, e-mail), including physical (not postal) address;
- The name of the importer (referred to as the consignee, meaning the person or firm o whom the goods are to be sent) and their contact details (tel, fax, cell, e-mail), including physical (not postal) address (In the case of transshipment, there may be an intermediate consignee and their contact details and addresses should then also be included on the invoice.);
- The name of the person and company to notify once shipment has taken place and their contact details and physical address (here the contact details such as telephone, fax and cell number and e-mail address are more important than the physical address);
- A commercial invoice reference number;
- A purchase order or similar reference for correspondence between the supplier and importer;
- The date of issue of the commercial invoice;
- A complete, detailed and clear description of the goods in the question, incorporating the appropriate HS codes and brand marks if applicable (here the importer may ask you to remove these codes as they may not be the same in the importing country and may thus incur additional or higher duties to the importer’s deterrent because of their inadvertent misuse);
- The quantity of goods in question, including the number of units/items;
- The packing details unless provided in separate packing list, including their external dimensions, cubic capacity, weight, numbers and contents of each package shipped and kinds of packaging involved (pallets, boxes, bags etc.) if a separate packing list is used, reference should be made in the commercial invoice to the packing list;
- The grand total price of the goods for the whole consignment;
- Where applicable, the unit prices should be indicated – the unit price multiplied by the number of units/items should be reflected in the line total. The various line totals (in the case where different items are included in the same commercial invoice, or where additional services are itemized in the invoice), should add up to total price for the whole consignment (also referred to as the ‘Grand Total’);
- The currency in which the goods will be sold (e.g. US dollars or rands);
- The type and amount of any discount given, where applicable;
- The likely delivery schedule and delivery terms;
- The payment methods (for example cash in advance, documentary collection, L/C, etc.);
- The payment terms (for example 30 days on sight);
- The Incoterm to be used (Incoterms 2000 – FAs, CIF, CFR, DDP, etc.);
- Who is responsible for the banking fees and other related costs (insurance and freight costs are covered by the Incoterm in question);
- What are the freight and insurance charges are;
- The exporter’s banking details;
- A declaration of the country of origin of the goods;
- The expected country of final destination;
- Any freight details such as the port of loading and discharge;
- Any additional exporter-provided services that should be added to the invoice to come to the grand total;
- Any transshipment requirements;
- The validity of teh commercial invoice – that is, when does the offer expire (leaving it open-ended could be very risky);
- Any other information elevant to the order; and
- Make sure the commercial invoice is signed, together with the signaure’s name witten underneath, with initials, title and position.