No merchant or exporter can operate without proper documentation of goods, hence the need for commercial invoice. A commercial invoice is needful for transaction clarification and payment. It’s a document that gives details of items or services for which a seller is demanding payment.
What is a Commercial Invoice?
A Commercial invoice is a legal document issued by a supplier to a customer to provide full details of business transactions between trading parties. Also, it gives full details of goods sold, types and quantities of merchandise sold, and the actual amount due on the customer as agreed by both parties.
Furthermore, it is an essential document with which Customs Service determines the worth of goods. For example, if Tank Farm & Petroleum Products Marketing Limited buy refined petroleum products from Sinopec, the Nigerian Customs would demand to see the commercial invoice issued by Sinopec for verification. Also, the government relies on it for import and export verification.
Importance of Commercial Invoice
Now that you have known the usefulness of commercial invoice, I am sure you are aware of some of its importance. Below are some of its benefits.
Record Keeping: One essential importance of commercial invoice is record keeping. A Commercial invoice does not only aid good record keeping but also, helps in determining your stock level per given period.
Sales Evidence: Commercial invoice also serves as sales evidence. It helps in preventing a customer from denying a transaction. An invoice is a piece of legal evidence with which to demand payment. Also, it is needful when the need to prove your case in a law court arises. It clearly shows a buyer’s acknowledgement of goods sold.
Exploitation Prevention: Commercial invoice protects merchants from exploitation reason being that its elaborate nature helps in exposing fraudulent buyer or seller who tries to play smart on the other party.
Payment Assurance: Although a commercial invoice isn’t a payment instrument, it plays vital roles in payment assurance reason being that it’s a legal document that proves that transaction takes place. Also, a seller could refer an unpaid debt with the aid of a commercial invoice, and this will invariably propel the customer to pay up their debts.
Accuracy Check: One essential benefits of commercial invoice is that it provides enough information needed by the importer when checking orders and receipts accuracy. With the aid of an invoice, a buyer can check to know if goods supplied corresponds with his order both in quality and quantity.
Due Payment Notice: An invoice could serve as notice for due payment. Also, the use of invoice as payment notice aids prompt payment. Furthermore, it is a tool for good customer relationship.
What Are The Contents of an Invoice?
The essence of a commercial invoice is to give detailed information about a given transaction. It provides information about trading parties as well as the trade itself. Let us now look at some general contents of an invoice.
Invoice Number: This is an essential invoice content that serves as a sorting instrument when dealing with multiple invoices.
Invoice Date: This is the date a seller or exporter issues an invoice to a buyer.
Order Number: This is a bit similar but different from the invoice number.
Shipper’s Information
Shipper’s Name: This is the exporter’s name which serves as the seller’s identity. It is a useful reason being that it protects you from making payment into a wrong account.
Address: Except you are buying from an online platform, a physical address of an exporter is essential. The reason is to enable you to carry out due diligence on the seller party and invariably save yourself from fraudsters.
Telephone Number: Just like the address, the issuer must provide their telephone number. The inclusion of the telephone is to make sure there is a free flow of communication. It is the telephone number through which a buyer could contact the seller whenever the need arises.
Country: This is exporter’s country name. It doesn’t mean product origin.
Receiver’s Information
As mentioned earlier, a commercial invoice must make provision for importer’s details. Here is some required information about a receiver.
Name: This refers to the name of the buyer party, usually a company or an agent.
Address: The physical address of the buying company or its agent.
Telephone: It refers to the buyer’s telephone number but maybe that of the contact Party:
Country: This states the country where the buyer wants to receive goods. It’s the importer’s country to be precise.
Notify Party: A notify part could be a freight forwarder or the final receiver of the goods.
Address: This address may be different from that of the importer in case the contact person is different from the notifying party.
Shipping Information
AWB Number: The Air Waybill number is proof that an air carrier has agreed to ship the goods to a named port.
Forwarding Agent: This refers to the shipping company’s name.
Date of Export: Date of Export refers to the day of completing exit formalities for the preferred means of transport.
Payment Mode: This shows the mode of payment both parties have adopted. It states the means of payment as well as payment terms.
Shipment Information
The shipment information refers to product details. It states the quantity, unit price and many more.
Number of Pieces: This refers to the number of pieces of goods to be shipped. Note that this is only useful when you are dealing with countable products.
Specification of Commodities: Some products are identical but differ in quality. The product specification shows general attributes of each product a seller is planning to ship to a buyer or his agent.
Weight: Each product weight is clearly stated to assists exporter when deciding shipping cost.
Quantity: Quantity represents the number of items contained in the order. It could either be in pieces or volume.
Unit Price: The unit price is the amount quoted for each unit of the products, which shows the buyer how a seller arrives at the total price quoted.
Total Weight: Total weight is the total of all units’ weight.
Currency: It shows which currency the seller uses, especially if the buyer is from another country.
Total Amount: This is simply the total of all costs, and it includes the cost of product and all other charges payable on the consignment.
Country of Origin: The origin is where the goods were produced. Note that country of origin may be different from exporter’s country.
Sender’s Name: Sender’s name could be that of the seller or their agent.
Signature: This is a seal of approval by the sender. It may come in the form of signature or company seal or possibly both.
Are There Other Types of Invoice?
There are many types of invoices which include a standard invoice, progress, utility, proforma invoice and many more. Invoice varies from one industry to the other, and each of them serves different purposes.
Standard Invoice: This is possibly the commonest invoice available as its usage cuts across several industries. A non-negotiable commercial instrument, a standard invoicing serves as a demand for payment. Also, it is a document of a title when paid in full.
Progress Invoice: Progress invoicing or progress billing is the process of billing a client incrementally with respects to the percentage of completed work from total work due. Popular with large projects, it ensures consistent cash flow and increases motivation.
Customs Invoice: An essential requirement for customs clearance, a Customs Invoice is a document that contains all information about the items in your parcel.
Pro-Forma Invoice: A preliminary invoice with a quotation, a proforma invoice is an invoice with which a seller notifies a buyer of the estimates of goods to be shipped. Also, it includes terms and conditions for the transaction.
Summary
There are different types of invoice, so also are their features but here are general contents of a commercial invoice: Full names, addresses and telephone numbers of all parties including the consignee, consignor and notify party. Also, it contains the terms of trade and payment as agreed by both exporter and the buying party.
Furthermore, it provides thorough product description as well as quantity, weights and units in case of countable products. It provides buyer enough analysis on cost per unit and total cost of a consignment which includes shipping cost. It does not only provide a product’s country of origin but also, clearly states port of destination.
Finally, it may look unauthentic if it’s not duly signed and sealed by the issuing party. The sender’s signature signifies approval and makes it a legally binding document as long as it doesn’t contain any form of discrepancy.