What is a commercial invoice?
A commercial invoice is the final bill a seller issues for goods it has sold, setting out what was sold, the quantities, the prices and the terms, and it is the document customs uses to value goods that cross a border. It is a demand for payment and it records the sale in the seller's books. In international trade it travels with the shipment.
The term is used in two ways. In shipping and customs, commercial invoice means the specific export or import document. In everyday accounting it simply means a normal sales invoice, as opposed to a pro forma invoice that comes before the sale.
It is the real invoice.A commercial invoice asks for payment and records revenue and a receivable.
Customs relies on it.Customs uses it to check what the goods are, where they come from and what they are worth.
It follows the pro forma.A pro forma previews the deal; the commercial invoice confirms it after the sale.
What goes on a commercial invoice
For goods coming into the US, the required contents are set out in 19 CFR 141.86, and a commercial invoice is needed for each shipment under 19 CFR 141.83. The main items are below.
Port of entryThe port where the goods will enter the country.
The partiesThe seller and the buyer, and the time and place of the sale or shipment.
A detailed descriptionWhat the goods are, including grade or quality and any marks, with quantities.
Prices and currencyThe purchase price of each item in the currency of the sale, and which currency that is.
Other chargesFreight, insurance, packing and similar costs, listed separately, plus any rebates or discounts.
Country of originWhere the goods were made.
In the UK, HMRC asks exporters to prepare the invoice and other documents for their goods, and importers may need to send invoices to support the value on a declaration if it is selected for a check (HMRC). In practice a commercial invoice is usually needed to support the customs declaration.
Commercial invoice vs pro forma invoice vs packing list
| Document | When | Purpose |
|---|---|---|
| Pro forma invoice | Before the sale | Preview of costs for the buyer, a deposit request or advance customs paperwork |
| Commercial invoice | After the sale, with the shipment | Demand for payment and the basis for customs value and duty |
| Packing list | With the shipment | What is in each package, with weights and dimensions; no prices needed |
Customs can sometimes accept a pro forma invoice when the commercial invoice is not ready yet. The final commercial invoice then has to follow.
Getting paid on a commercial invoice
Cross-border invoices add friction for the buyer: another currency, bank charges and a supplier they may never have met. State the currency, the payment terms and the due date clearly, and give the buyer an easy way to pay, such as a payment link in addition to bank details. Once the invoice is in Xero or QuickBooks Online, Paidnice can send the reminders and statements for it like any other invoice.
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