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Commercial invoices are one of the most common documents related to international shipping and returns. They are essential for any online store that exports or sells its products abroad or to territories with other tax systems.
The differences between shipping within the European Union and outside it (or to territories with a different tax system) are enormous and can slow down the eCommerce logistics of any online sales business.
Forgetting about these invoices can lead to bad purchasing experiences and losing customers, to say the least.
What is a commercial invoice?
The commercial invoice is one of the most important documents in international sales operations. This accounting document is used to calculate the taxes and duties to be paid in customs clearance, and it also serves as proof of the sale between exporter and importer.
The commercial invoice is often confused with other documents such as the proforma invoice, the bill of lading, the customs invoice or even with the packing list. These documents aren’t exactly the same as the commercial invoice, so they shouldn’t be used in the same way. Later, we will explain the differences and similarities between these various documents.
Filling in a commercial invoice shouldn’t be a difficult task. However, it’s important that you keep in mind that any error can have negative consequences for your online store and your buyers —everything from a delay to the complete cancellation of the shipment.
Automating this task is, without a doubt, one of the best ways to avoid shipping issues that can be caused by human error and to keep your international customers as happy as your domestic ones.
Who issues the commercial invoice?
The commercial invoice is issued by the exporter of the goods. It’s important to bear in mind that the exporter of the goods doesn’t necessarily have to be the seller, in the same way that the receiver doesn’t have to be the buyer. However, when it comes to online sales, the online store is most likely the exporter and the buyer is probably the importer.
Unlike with other types of invoices, the only person in charge of issuing the commercial invoice is the exporter.
When is a commercial invoice required?
The commercial invoice is an essential document for selling to foreign markets. The commercial invoice is only relevant to shipments that are headed to a destination with a different tax system.
This applies to third countries, but it can also apply to a national territory with different tax systems.
Creating a commercial invoice
Creating a commercial invoice isn’t a difficult process, but it can be tedious and you may feel that the time could be better spent on other activities.
However, in order to make your export operation even easier, you can use a pre-designed template from the internet and simply fill it out or, even better, use software to automatically generate commercial invoices whenever they are necessary.
This is one of the advantages of using Outvio. In addition to its primary features and advantages, the software also generates commercial invoices for you and automatically prints them with the shipping labels.
What should a commercial invoice include?
Commercial invoices must include a series of data points, as stipulated by law. However, there’s also optional data that will undoubtedly make customs clearance even faster, so we recommend that you include as much information as possible. The most important things to include are:
- Issue number and serial number, if needed
- Invoice issue date
- Order number
- Total value of the sale
- Payment conditions (method and due-date)
- Information about the online store, which acts as the exporter in this case: name, address, phone number, EORI number or any other tax identifier, etc.
- Information about the importer, which is, in this case, the buyer: name, address, phone number, EORI number or any other tax identifier, etc.
- Information about the person that should be notified upon the arrival of the package
- Number of bill of lading
- Forwarding agent
- Tariff code (HS code)
- Description of the goods (number of packages, units, weight, etc.)
- Origin of the goods
- Exporting date, means of transport and destination
- Signature of the shipper
Invoices can be issued in any language, with English being the most logical option worldwide, unless you are exporting to a country that uses the same language as yours.
Despite the freedom to choose the language in which the commercial invoice is issued, it is important to take into account the legislation of the destination country. The content, language and other requirements may vary.
To find out which requirements must be met in the destination country, you can visit the Access2Markets portal of the European Commission and input the tariff code, the country of origin and the country of destination to find out what the commercial invoice looks like in that country.
Why are commercial invoices important for online stores?
The commercial invoice is of vital importance for the effective management of the export operation in customs clearance, since it greatly speeds up the procedures and allows for a more exact overview of the taxes and tariffs that must be paid.
Without this document, the products that you send as an online store will be held in customs until you present all the necessary information for the package to reach your customer.
How to attach a commercial invoice?
Commercial invoices must be printed and included in a transparent envelope with the package, for later verification at customs. If you’re wondering how many copies of the commercial invoice you have to submit, the answer is three.
Consequences of not including a commercial invoice
Adding a commercial invoice to international shipments has several advantages, from speeding up the arrival of the package to the reassurance that your customers won’t be charged additional fees unnecessarily. This is a crucial element of customer satisfaction, since they are more likely to repeat the purchase if they don’t face unexpected customs taxes required to receive the products.
Another possible consequence are delays in the delivery of the package. The duration of these delays depends on how quickly you submit the necessary information to the customs authorities.
Generally speaking, international customers have to be more patient with the arrival of parcels. Avoiding any possible delays and shipping issues should be your top priority in regards to international shipping if you want to offer international customers the best possible purchasing experience.
Another situation you may face is the return of the package to origin. When this happens, you’ll not only have to process the parcel again and contact your customer to explain the situation, but you’ll also need to pay the shipping costs from the customs office to your store.
To avoid unpleasant situations like these, we recommend that you carefully complete the commercial invoice and attach three copies to the package in a transparent envelope.
Other types of invoices and documents related to international selling
Besides the commercial invoice, there are a number of documents that may be required if you ship internationally outside of the EU or to territories with other tax systems. Here are some of them:
- Certificate of origin. This document, which is issued by official institutions, determines the country in which the merchandise was manufactured or produced. This certificate is essential when exporting from the EU to another customs territory. Countries that carry out intra-community transactions don’t need to provide a certificate of origin. (Note: Do not confuse the country of origin of the shipment with the place of origin of the goods).
- Customs invoice. This invoice can be a substitute for the commercial invoice in the case of exports to some countries. This invoice will be further explained below.
- CN22 and CN23 forms. These forms are required for shipping goods outside the EU using a postal service. Depending on the weight and value of the shipment, you must use one or the other.
- Delivery note CP71. This document accompanies the CN23 and is issued for items with a value greater than €300.
- ATA Carnet. This document is necessary for the movement of goods across borders for exhibition purposes (fairs and events). The ATA carnet is valid in more than 70 countries (mostly in Europe, Asia, Oceania, and North America).
- CPD. This carnet is similar in purpose to the ATA Carnet but its scope is limited to other territories.
Invoice types: FAQ
Once you start exporting, you’ll notice that the number of invoices you have to issue increases considerably. As a business, you’re probably used to creating proforma invoices and perhaps e-invoices on a regular basis.
With the rise of international sales, you may begin to face other types of invoices. Hereafter, we explain the differences between a commercial invoice and some of the invoices that online stores have to work with frequently.
Commercial invoice vs. proforma invoice
The main difference between these two invoice types is that the commercial invoice has an accounting value, while the proforma invoice has a purely informative value.
Apart from this difference, commercial invoices are used for exports and imports, while proforma invoices are mostly used domestically. Proforma invoices can be used as a base for the commercial invoice as long as you add all the necessary data that isn’t included in the proforma invoice.
Commercial invoice vs. packing list
The main difference between these two documents is their purpose.
The packing list aims to facilitate the identification of the freight forwarder, the customs agents and the receiver of the shipment. It’s also used to issue the bill of lading, which is, essentially, a contract between the sender and the transport company in charge of freight.
Commercial invoices are used to calculate taxes or duties and to prove the existence of an international sales contract.
Commercial invoice vs. customs invoice
Commercial invoices are used to calculate taxes and duties and to prove an exporting/importing operation between two parties.
Commercial invoices are the minimum required for export, but customs invoices include additional information that won’t hurt in the customs clearance process. Customs invoices may only be necessary for certain destinations and may contain additional information that may not always be in a regular commercial invoice.
Commercial invoice vs. bill of lading
These documents are similar in the information they contain, but different in purpose.
While commercial invoices are meant to serve as proof of an export/import operation and for the calculation of taxes, B/Ls (bills of lading) are used to acknowledge receipt of cargo for shipment.
Bills of lading are issued by a carrier or their agent and include the nature, quantity, quality and leading marks (identification marks and numbers) of the exported goods.