Commercial invoices are considered to be an indispensable element in international trading as no exporter or merchant can trade in their absence. Businesses need to become familiar with the proper structure and essential details of commercial invoices to keep the trading process smooth.
Table Of Contents :
1) What is a Commercial Invoice?
2) What is The Format of Commercial Invoice?
3)Importance of Commercial Invoice
4) Difference Between Commercial Invoice And Proforma Invoice
5) Difference Between Commercial Invoice And Tax Invoice
6) FAQ
What is a Commercial Invoice?
Typically, a commercial invoice is an essential document that exporters provide to the importers and is considered as a seller’s bill. Buyers or importers use this invoice in addition to other shipping documents so that a shipment can go through the customs of the importing country. As a result, a commercial invoice is mandatory for all sea and air freight shipment services.
The said business document contains information regarding –
- Shipment to buyers
- Customs
- Agents
- Freight forwarders
- Banking institutions
Usually, an international commercial invoice does not include taxes as internationally bound transactions may not be subject to local taxes. At all times, exporters must ensure to provide all accurate details in the correct format so that the shipment can clear the customs without any trouble. Also, the precise data will help them to understand the applicability of taxes and import duties on specific consignments.
What is The Format of Commercial Invoice?
Though there is no specific commercial invoice format, the shipping and export invoice must contain the following details –
- Company name, address and contact details of the exporter
- Company name, address and contact details of the importer
- Buyer’s details in case they are not a consignee
- Type of shipment
- Mode of dispatch
- Name of the vessel and voyage number
- Date and invoice number
- Names of the loading and discharge port
- Destination of the goods
- Name of the country where goods originated
- Bill of lading number
- Marine cover policy and Letter of Credit
- Terms of payment
Besides these, every commercial invoice contains details of the products. For instance, the invoice states the description quantity, HSN/HS code, unity type, currency and price. Additionally, the terms of trade and other noteworthy terms of an agreement between trading parties must be stated in the invoice. Last but not least, the name, date and signature of the concerned company’s authoritative representative must be mentioned in the commercial invoice.
Importance of Commercial Invoice:
A commercial invoice serves as an essential document as it provides clarification about the transactions and associated terms of payment. In addition to this, the Customs Service uses this document to ascertain the goods’ value, and the government often refers to it to verify import and export.
Other functions of a commercial invoice are as follows –
- Serves as evidence of sale
- Helps in record-keeping
- Assures payment
- Prevents exploitation
- Serves as a notice of due payment
- Helps to check the accuracy of orders and receipts
- Enables to raise funds for working capital requirements
The invoice so issued can also be utilised to raise funds for fulfilling urgent capital needs of your business. KredX provides its invoice discounting services to raise funds for the uninterrupted cash flow of your business. It can thus help you to meet the gap between shipment and payment receipt without straining the existing working capital.
Difference Between Commercial Invoice And Proforma Invoice:
The salient differences between a commercial invoice and a proforma invoice are highlighted below –
| Commercial Invoice | Proforma Invoice |
| It is required in the post-shipment phase. | It is required in the pre-shipment phase. |
| Commercial invoice helps to request payment for items sold. | Proforma invoice offers a fair idea about what to expect in terms of – price, quantity, quality, and delivery terms of products or services. |
Difference Between Commercial Invoice And Tax Invoice:
| Commercial Invoice | Tax Invoice |
| A commercial invoice is a seller’s bill. It is an essential document that comes in handy for the customers and helps to determine the actual value of imported goods. | A tax invoice is a document that states the amount charged for goods and services. It can be issued by a registered dealer or a service tax provider. |
| It helps to identify the buyer and seller, and enables assessment of taxes and duties. | It specifies the taxes payable towards such amount charged. |
With this information on commercial invoices, businesses can maximise their utility by leveraging them to raise funds. KredX, India’s leading integrated cash flow solution provider, offers funding of up to 90% of the total invoice value with funds disbursed within 24-72 hours* of application. Complete the application process online now to benefit from our invoice discounting services!
FAQs
A. The risks of incorrect invoice fill-up involve lengthy hold-ups also shipping delay cost. It may also lead to underpayment of the amount of taxes and duties due during the customs declaration.
A. Some critical components of a commercial invoice include name, address, and country of both the buyer and the seller, details of the shipment, delivery and payment terms, etc.
A. A poorly drafted commercial invoice can be misinterpreted or be easily disputed, resulting in late payment. Inaccurately reported sales or hours of labour could lead to confusions concerning the amount.
A. NCV indicates that the goods shipped do not carry any commercial value and so there is no need to pay tariffs during customs clearance.
