What is a commercial invoice in exports?

Commercial invoice is a legal document used in international trade to process agreements. Here’s a guide to understand its uses and how to obtain it.
What is a commercial invoice
Among a host of bills required during the export process, a commercial invoice is one such crucial document, especially in case the goods are being shipped via ocean freight. It is a legal document provided by an exporter (seller) to the importer (buyer) in an international transaction that functions as a contract and evidence of sale between the two respective parties. Customer departments across the world use a commercial invoice for inspection, computing customs charges and keeping track of international trade data.

What is a commercial invoice?

Commercial invoice is a legal document used in international trade to process agreements. An importer uses this invoice, along with additional shipping documents, to clear the cargo at customs in both the export and import countries. It usually contains information regarding price, value, quantity, etc, giving customs authorities details about the shipment. In some cases, a commercial invoice in export is also used to authorize the transfer of money to the exporter for payment by the importer.

Why is a commercial invoice important?

To comply with laws for export-import in various countries' customs departments, a commercial invoice is necessary for each overseas cargo with any commercial value. It contains information about shipment for the buyer, freight forwarder, customs broker, clearing and forwarding agent and bank. A properly filled and accurate commercial invoice in export aids customs authorities in rapidly determining what taxes and import duties apply to a particular shipment, thus decreasing delays.

What are the uses of a commercial invoice?

Some of the key uses of a commercial invoice in export are1:
• Maintaining records: Record keeping is a critical component of businesses. A commercial invoice provides information and aids in efficient record-keeping.
• Evidence of sale: A commercial invoice also acts as proof of sale, preventing an importer from rejecting a transaction. It is also used as evidence to claim payment.
• Assurance of payment: Although a commercial invoice is not a payment receipt, it plays a key function in payment assurance since it is a legal document that verifies that a said transaction has occurred.
• Check for accuracy: One of the most important advantages of a commercial invoice is that it gives the importer sufficient information to confirm the accuracy of orders and receipts.

What are the requirements in a commercial invoice?

A commercial invoice does not provide any evidence of ownership of the cargo. It acts as documentation of a sale between the exporter and the importer. Some of the common details mentioned in a commercial invoice in export are2:
• Exporter and importer: Name, address, tax information and the contact details of exporter and importer
• Transaction: Invoice date, invoice number, order number, product description, quantity and worth of items, payment method and instructions, IEC, GSTIN and country of origin
Shipping: Freight costs, route of export, date of shipment, gross weight of the shipment, number of packages and charges for insurance

Format of a commercial invoice

Below is a commonly used format of a commercial invoice:
Format of Commercial Invoice
Obtaining these export documents and meeting the required regulations is one of the first steps in the export process. Today, with growing internet penetration and technological advancements, many Indian sellers and exporters are opting to sell internationally using an e-commerce exports program.

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Frequently Asked Questions

What are the uses of a commercial invoice other than export?
Apart from exports, a commercial invoice is used for other purposes like:
• Maintaining records
• Evidence of sale
• Assurance of payment
• Accuracy check
How is a Bill of Lading different from a commercial invoice?
A commercial invoice is a legal document supplied by the exporter to the importer in an overseas selling transaction, while a Bill of Lading (BOL) is an official contract between the exporter and the shipping company that contains information on products sold, amount and address of the receiver.
What other export documents do I need to export from India?
Import Export Code, Authorized Dealer code, Importer of Record and Letter of Undertaking are some of the key documents required to export from India. Along with this, depending on your business, products you are exporting and destination country, you might need additional documents like FSSAI license for consumables, etc.
Published on June 20, 2022.

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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.

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