What is a Commercial Invoice?
Commercial invoices are among the most important legal documents in international trade and shipping. Issued by the seller (exporter) and provided to the buyer (importer), they both confirm the sales agreement and record the transaction. A commercial invoice includes product descriptions, quantities, prices, country of origin, HS codes, Incoterms, and the seller’s and buyer’s contact information.
While a commercial invoice does not establish ownership of the goods (the role of the bill of lading), customs authorities worldwide must assess duties and taxes and process clearance. Freight forwarders, customs brokers, banks, and insurance companies also frequently rely on it to support various steps of the shipping process.
Commercial invoices are typically issued once the deal is finalised and the goods are ready to ship. They can be provided in either paper or electronic format. Accuracy is critical—mistakes or omissions can lead to customs delays, penalties, or shipment holds. Since requirements vary by country, it’s important to ensure that all necessary details are included and that freight, insurance, and other costs are properly reflected based on the agreed trade terms.
What are the uses of commercial invoices?
The main uses of commercial invoices include:
- Customs declarations: A commercial invoice is an indispensable document in the customs declaration process. Customs uses it to assess duties and import taxes.
- Proof of payment: It proves what was transacted between the seller and the buyer and serves as the basis for payment.
- Transportation Arrangement: The merchandise information on the invoice helps carriers and logistics companies understand the contents of the goods and ensures cargo allocation and tracking during transportation.
- Legal documents: The commercial invoice, as a subsidiary document of the transaction contract, can also be used as legal evidence in case of dispute.
- Letter of Credit Payment: When payment is made through a letter of credit, the commercial invoice is a key document for verifying payment terms.
Shipping Information Required for Commercial Invoice
On a commercial invoice, you typically need to include the following transportation-related information:
- From: This is you, the person sending the package.
- To: The name and address of the person or company to whom you are sending the package.
- Intermediate Consignee: If you are sending the package to an intermediary, fill in the details of that person or company here.
- Date: The date you sent the package.
- Invoice Number: Your invoice number.
- Customer PO No: Reference or order number of your sale.
- Currency Used: The currency you used when filling in the document.
- Country of Origin: The country where your product comes from. In some cases, you must add a CO document.
- Reason for export: Tick everything applicable.
- B/L/AWB No: This refers to the transport document setting out the arrangements with the carrier. The carrier is often responsible for preparing this document.
- Final Destination: The final destination of your package.
- Export Route/Carrier: The shipping company you are working with or your package’s route.
- Terms of Sale: Better known as the Incoterms.
- Terms of Payment: The payment terms between you and the seller (e.g. payment within 30 days of receipt, direct deposit).
- Terms of Freight: Freight conditions (e.g. prepaid, collect). You can also enter these terms and conditions in the Terms of Sale or the Incoterms.
- No. of Packages: The number of packages you are sending.
- Comments: Space for shipping or delivery instructions or other notes.
- Contents: A description of the articles you are sending.
- HS Code: The HS code or commodity code.
- Value: Price per product.
- Net Quantity: Total number of products.
- Weight KG: Total weight of the package.
- Freight: If applicable, report the shipping costs here.
- Insurance: If applicable, report the insurance costs here.
- Date and signature: Your name, signature, and date. It may seem obvious, but your package will probably not be sent without your signature. So make sure to sign and date all your packages.
Difference between commercial invoice and packing list
| Project | Commercial invoice | Packing list |
| Main content | The information includes the commodity name, quantity, unit price, total price, payment terms, shipper and consignee information, transportation terms, delivery date, etc. | Packing method, size and weight of each box, box number, details of goods in each box, etc. |
| Main Uses | It is used as a transaction document to confirm the transaction amount, price, payment terms, and customs declaration. | Used for transportation, logistics management and customs clearance to ensure the goods arrive correctly. |
| Legal effects | They have legal effect as part of the contract and can be used as a basis for dispute resolution and payment. | Usually not legally binding, it is mainly used for logistics and customs clearance. |
| Information focus | Focusing on economic transaction information, such as price, payment terms, transaction details, etc. | Focuses on packaging, merchandise distribution, transportation and customs clearance details |
| Functions | Used for confirming transaction details, payment settlement, and customs declaration as a legal document of the transaction | Used to ensure that goods are transported and cleared accurately according to the packing list and to verify the contents of the goods |
| Related documents | It may be used in conjunction with contracts, payment vouchers, etc. | Used in conjunction with freight bills, shipping labels, etc. |
How can commercial invoices help with customs clearance?
Commercial invoices are vital for smooth customs clearance, and the following points can help ensure smooth customs clearance:
- Accurate and detailed description of goods: The description of goods on the invoice should be clear and accurate, containing information such as the name of the goods, model number, brand, and purpose. Vague or inaccurate descriptions can lead to delays or denial of customs clearance.
- Correct price of goods: Make sure that the price stated on the invoice is true and accurate and corresponds to the actual circumstances of the transaction. Customs usually uses the price on the invoice to calculate duties and other charges.
- Clarity of terms and conditions: Stating the terms of the transaction (e.g., FOB, CIF, etc.) on the invoice helps clarify responsibilities and ensures that Customs understands the respective obligations of the seller and buyer.
- Additional documents: Ensure that other necessary documents are provided (e.g., certificate of origin, shipping documents, insurance policies, etc.), which will help complete customs clearance.
- Compliance with destination country regulations: Different countries have different customs clearance requirements; ensure you understand and follow the destination country’s customs clearance requirements to avoid being returned or detained due to non-compliance.
How to Fill Out a Commercial Invoice for Shipping
Regarding international shipping, a properly completed commercial invoice is essential for smooth customs clearance and on-time delivery. Accuracy, detail, and consistency are key. Here are the critical elements and best practices to keep in mind:
- Detailed Description of Goods: Clearly and precisely describe each item being shipped. Avoid vague terms—specify the type, function, and characteristics to ensure proper classification.
- Correct HS Code: Use each item’s accurate Harmonised System (HS) code. This determines duty rates and import restrictions. If unsure, consult a customs expert or use official resources.
- Country of Origin: Indicate where each product was manufactured or produced. This can impact duty rates and eligibility for trade agreements.
- Declared Value and Currency: State the fair market value of the goods in a recognised currency (e.g., USD, EUR). Understating value is illegal and can result in fines, delays, or seizure of goods.
- Trade Terms (Incoterms): Specify the agreed Incoterm (e.g., FOB, CIF, DDP), which defines the responsibilities, costs, and risks for the buyer and seller during transit.
- Reason for Export: For non-sale shipments (such as samples, gifts, or warranty returns), clearly state the purpose in the export reason section. Even if the value is low, a commercial invoice is still required.
- Multiple Copies: Provide several copies of the invoice to meet the requirements of customs authorities, carriers, freight forwarders, and the recipient.
- Language Requirements: English is the standard for most international shipments, but some countries may require a local language translation. Check the destination’s requirements in advance.
- Company Letterhead: Print the invoice on your company’s official letterhead. This reinforces authenticity and professionalism.
Completing a commercial invoice isn’t just a paperwork exercise—it plays a critical role in the international shipping process. Mistakes or missing information can lead to delays, added costs, or even legal trouble. A well-prepared invoice ensures your shipment moves efficiently through customs and arrives at its destination without unnecessary setbacks.
