There are many different types of invoice and not all of them are suitable for international shipping. Below is an outline of the three main types of invoice and how they can or cannot be used for shipping.
Principally we are looking at shipping physical items so all the items examples below are referring to physical items and do not include services.
Pro-forma Invoice
This is a basic invoice that provides a cost to a potential buyer for goods or services. Often used like a quotation it is used for a buyer to pay against if they do not have an agreed credit limit. A pro-forma invoice should not be used for international shipping or shipping within the EU.
Once your customer has sent payment for the pro-forma invoice you should generate a proper Sales or Commercial invoice.
Sales Invoice (or ‘Standard’ Invoice)
This is a basic format invoice used for most product sales to a customer with a credit account and will include such information as:
- Invoice number
- Date generated
- Payment terms e.g. 30 days
- Name of seller & company address details
- Name of buyer & company address details
- Description of items purchased
- Total cost
A sales invoice typically does not contain enough information to be used for international shipping but can be used for shipping within the EU.
Commercial Invoice
A commercial invoice is the invoice most suited for international trade as it is the most comprehensive. It is used for the customs declaration when goods cross international boarders. It should state ‘Commercial Invoice’ and contain all the required information such as:
- Invoice number
- Date generated
- Payment terms e.g. 30 or 60 days etc.
- Name of seller & company address details
- Name of buyer & company address details
- Description of items purchased and part numbers
- Total cost including any Tax payable
- Incoterms
When being used for international shipping ensure it also includes:
- Country of Origin declaration
- Harmonised Tariff / Commodity code information
- Declarant Signature
Some countries customs offices also require:
- Nett weight of each item (weight excluding packaging)
- Gross weight of each item (weight including packaging)
- Gross & Nett weight of whole shipment
Depending on the computer system you use you may have an option to generate one or all of the above types. If you are not able to select different invoice types I would suggest you generate a template you can reuse. Microsoft Excel and Word both come with many downloadable invoice templates or you could create your own.
Many couriers offer advice and free commercial invoice templates as without the proper invoices your shipments will be delayed and incur storage fees. I have put the links to some of the most useful pages below:
Invoice Discounts
If you give a discount to a customer and show the discount on the invoice (e.g. special 10% trade discount) it can affect how the shipment is cleared through customs. Most customs offices will not recognise the discount and will demand import duty and tax is paid on the full (non-discounted) price. This is because the value of the goods should be at market value – if one company can buy and import the goods cheaper (due to a discount) than another company – this gives an unfair advantage. The same can apply to other discounts such as early settlement discounts.
AK Logistics and Supply Chain 