Commercial Invoice

The record of a concluded sale

A commercial invoice is issued by the seller to the buyer and states the transaction: who is selling, who is buying, what goods, in what quantity, at what price and in what currency, on what terms of sale and payment. It is a commercial document first, and it exists whether or not the goods cross a border.

Because it is the primary written statement of what was agreed, other documents are checked against it. That is why an error on the invoice propagates through a shipment rather than staying in one place.

Why customs reads it

In most jurisdictions the starting point for valuing imported goods is the price actually paid or payable for them, and the invoice is where that price is stated. Alongside the value, the authority is reading the description to determine how the goods should be classified and what treatment applies.

This is the reason a description written for internal convenience causes external problems. An internal product code means nothing to an officer. Words that describe what the item physically is, what it is made of and what it is used for are what allow a classification to be made.

How valuation and classification work in a given country, and what must appear on documentation presented there, vary by shipment, commodity, jurisdiction and trade lane. They must be confirmed with the relevant authority or an appointed customs representative — nothing here is customs advice.

A pro-forma is not the same document

A pro-forma invoice is issued before a sale is concluded. It sets out what a transaction would look like so a buyer can arrange payment, apply for a licence or open a credit. It records an intention, not a completed transaction.

Presenting one where a commercial invoice is required is a routine cause of delay, and it is easy to do by accident because the two documents look alike. Where goods genuinely move without a sale — samples, replacements under warranty, goods returned for repair — the invoice needs to state that plainly and to give a value for customs purposes with an explanation of what it represents, rather than a zero or a token figure with no basis.

Descriptions, values and the agreed terms

Three things repay attention. The description should be in plain language that matches the packing list and the transport document. The value should be the real transaction value, because understating it to reduce a duty liability is a customs offence rather than a saving, and it is also the value that will be paid out if the goods are lost.

The third is the Incoterms rule. Stating it on the invoice, together with the named place and the version of the rules being used, tells every party reading the file how the costs were allocated. An invoice that names a rule the parties did not actually agree causes a dispute that would otherwise never have occurred.