A commercial invoice is a customs document that enables goods to be shipped by a person or business across international borders.
Commercial invoices help shipments move seamlessly through the international delivery network and enable customs authorities to obtain a complete picture of what a delivery contains and the taxes or duties that may be associated.
A commercial invoice itemizes and records the actual transaction between seller and buyer. When correctly completed, it helps guard against delayed delivery, extra charges, and a poor customs experience for both parties.
A commercial invoice needs to provide a good deal of information, clearly and compliantly for goods to move across customs borders without delay. Accuracy is paramount—whoever completes the commercial invoice will be liable for its contents, and any incorrect or misleading information could cause a security or customs breach.
Let’s take a look at what a well-designed commercial invoice should include:
Unique invoice number
This is a unique number that helps to identify the invoice within your own accounting system. You can also use it to track payments made by requesting that this number be used to identify any associated transactions.
Time stamping a transaction is a key function of an invoice, so including dates is essential. You should include the date of issue and the date of supply (sometimes referred to as “tax point”) if this differs from the date of issue. You might also wish to include the date at which payment is due.
Your business name & address
This section should include everything needed to identify and contact the one sending the invoice. Make sure your company name, address, and contact information are clearly stated. Consider the different ways a customer may like to get in touch and provide a few options.
Country of origin
A commercial invoice should include the country of origin. This section refers to the country where the products are manufactured or produced.
Your tax ID
You need to include information that can help identify your business regarding tax. Depending on your location, this might be a value-added tax (VAT) or goods and services tax (GST) number, for example.
Customer’s name and address
A commercial invoice must also state who is responsible for the associated payment. Include the client or customer name, address, and relevant contact information.
Itemized goods or services
Your invoice should clearly show what was purchased and in what quantity. As a result, be sure to itemize your product list across separated lines, giving clear unit prices.
You should include Harmonized System (HS) codes, which are part of a system developed by the World Customs Organization to describe the types of goods shipped. Using HS codes can help your exports make it through customs faster.
Tax rates charged per item
Different items may be subject to different tax rates, and your invoice must reflect this. Be sure to outline tax rates charged per item for total clarity. By itemizing your invoice, you’ll be able to clearly show where certain items may be exempt or subject to different rates.
Breakdown of totals per tax rate
In addition to the tax rates, you should also clearly show the total amount you charged due to each of these rates.
Total amounts excluding and including tax
As well as including itemized pricing, your invoice needs to have a clear total owed. This section should reflect total amounts both exclusive and inclusive of tax.
Payment details and terms
Set out what the terms of the invoice’s payment should be. The purpose of an invoice is to give the complete summary information relating to the transaction, so including exact details such as the number of days in which the payment will be due is essential.
An outstanding invoice does more than simply provide the necessary record of a transaction; it also represents an essential touchpoint with your customers.
Whenever payments are involved, as a business, we want to do all we can to ensure that trust is high. And providing a generic, unbranded invoice does not convey a strong enough sense of this to your customer.
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An invoice is a real opportunity to give an impression of your brand. By paying attention to the design of your invoice, you can keep things consistent and build trust. In doing this, your invoicing becomes a positive part of your customer relationship and not just a financial necessity.