What is a Commercial Invoice?
A commercial invoice is a legal document used in international trade that details the sale of goods between a seller and a buyer. It serves as a record of the transaction and is essential for customs processing. The commercial invoice includes important details such as the buyer’s and seller’s information, a description of the goods, their value, and the terms of sale. Customs authorities rely on this document to assess duties, taxes, and any applicable restrictions on the goods being imported or exported.
The commercial invoice is one of the most vital documents in cross-border transactions, ensuring that both the buyer and seller have a clear record of the goods and the agreed payment terms. Without it, customs processing can be delayed, potentially leading to additional fees or the shipment being held at the border.
When Should You Use a Commercial Invoice?
A commercial invoice is required whenever goods are sold and shipped internationally, particularly when customs clearance is involved. Here are some scenarios in which you would need a commercial invoice:
- Exporting Goods: When goods are sent from one country to another, a commercial invoice is used to detail the sale and help customs authorities in the destination country process the shipment.
- Importing Goods: If you are purchasing goods from a foreign supplier, the commercial invoice acts as documentation for customs in your country, providing information needed for tax and duty calculations.
- Sample Shipments for Sale: Even if you’re sending samples or goods on approval, a commercial invoice may be needed if the shipment has a commercial value and will go through customs.
For any transaction involving international sales, using a commercial invoice is essential to ensure compliance with customs regulations.
What Should a Commercial Invoice Include?
A well-prepared commercial invoice ensures smooth customs processing. The following information should be included:
- Seller and Buyer Details: Full names, addresses, and contact information for both the seller and buyer.
- Invoice Date and Number: This helps track the transaction and provides a unique reference for customs authorities.
- Description of Goods: Provide a clear and detailed description of each item, including quantities, materials, and any distinguishing features.
- Value of Goods: State the value of each item and the total invoice amount, including the currency. This is critical for duty and tax calculations.
- Country of Origin: Indicate the country where the goods were manufactured. This affects duty rates and potential import restrictions.
- Terms of Sale (Incoterms): Specify the terms of the sale, such as FOB (Free on Board) or CIF (Cost, Insurance, and Freight), which outline who is responsible for costs and risks at each stage of the shipment.
- Payment Terms: Include details on how the buyer should make payment, whether it’s on delivery or in advance.
- Signature: An authorized signature or company seal authenticates the document.
A properly completed commercial invoice facilitates smoother customs clearance and reduces the likelihood of delays.
What is a Proforma Invoice?
A proforma invoice is a preliminary bill of sale sent to the buyer before goods are shipped. Unlike a commercial invoice, it is not a legally binding document and does not demand payment. Instead, a proforma invoice serves as a quote, providing an estimate of costs and detailing the goods and terms of sale.
Typically, proforma invoices are used for:
- Getting Approval from the Buyer: It allows the buyer to review the details and accept the terms before shipment.
- Arranging Financing or Permits: The buyer may use the proforma invoice to secure financing or permits required for import.
- Customs Pre-Processing: Some countries allow customs declarations to be made with a proforma invoice, especially if the final commercial invoice is pending.
Once the buyer accepts the terms in the proforma invoice, the seller can proceed with the shipment and issue a final commercial invoice.
What Does CN22 and CN23 Mean?
The CN22 and CN23 are customs declaration forms used for international shipments, especially for postal services. They provide information on the contents of the package, which customs officials use to assess duties, taxes, and ensure regulatory compliance.
- CN22: This is a simpler customs form used for low-value items, usually under a certain threshold (often around €300). It’s typically used for small parcels and is attached to the outside of the package. The CN22 includes basic details about the contents, weight, value, and purpose of the items.
- CN23: This is a more detailed customs form required for higher-value items above the CN22 threshold. It includes fields for a more comprehensive description of goods, weight, value, and commodity codes. The CN23 is often used for larger parcels and packages and may be accompanied by additional documentation if needed.
Both forms help customs authorities process shipments efficiently by providing essential information about the contents and purpose of the package.
