A commercial invoice is a formal request of reimbursement by the seller to the buyer. For your export shipments, it can serve several added functions:
- The destination country requires it before clearing the goods through customs.
- If there is an insurance claim on the shipment, it serves as a key supporting document.
- The buyer uses it to release funds through its bank to the seller.
- A bank examines it before reimbursing funds under a letter of credit or documentary collection.
- U.S. export regulations require that exporters retain it for five years from date of shipment.
- Exporters can use it to support foreign credit risk insurance claims.
In order to meet all these requirements, the commercial invoice you create for an export shipment needs to include, but is not limited to, items in the checklist below and will mirror the details specified in the quotation, purchase order, and order acknowledgement.
A commercial invoice is not a proforma invoice, which is a preliminary invoice. A proforma invoice is issued to assist the buyer in obtaining a letter of credit or an import permit in advance of the international shipment. (You can learn more about both forms in our comprehensive resource for all exporters, Export Procedures and Documentation: An In-Depth Guide.)
The U.S. government does not specify the details that must be contained in a seller's commercial invoice. The items presented in this checklist were gleaned from a variety of resources including the World Customs Organization's standards and guidance provided at export.gov.
Commercial Invoice Checklist for Exports
1. The time when and the place where the merchandise is sold.
2. The seller's name, address, contact information, and possibly its tax identification number.
3. The buyer's full name, address, contact information, and possibly its tax identification number.
4. The ship to party's full name, address, contact information, and possibly its tax identification number (if different from the buyer's).
5. A detailed description of the merchandise, including but not limited to:
- HS Number (first 6-digits of the Schedule B or HTSUS number),*
- Name by which each item is known,
- Grade or quality,
- Marks, numbers, and symbols under which the merchandise is sold,
- Country of origin,
- Quantity, and
- Price per unit.
*Many firms are adding the Harmonized System (HS) Number to their commercial invoices and consider it a best practice; others are refraining from adding the number to the line item detail. They are refraining from adding the number as there can be differing interpretations of a product by customs in the destination country. Each company must choose its position regarding the addition of the classification of its goods on the commercial invoices that they issue. (Read the blog post on this topic, Why You Shouldn't Include HS Numbers on a Commercial Invoice.
6. The country of shipment.
7. The relevant trade term and the location associated with the term, such as: Incoterms 2020, Free Carrier At Your Forwarder's Facility, Chicago, IL USA.
8. All goods and services provided by the buyer for the production of the merchandise (e.g., assists such as tools, dies, molds and engineering work).
9. A signature, signor's title, and date of signing.
10. Additional information provided in the terms and conditions or on the document:
- Import license requirements, if known,
- Additional certifications and statements required by the buyer's country,
- U.S. government issued certifications to be provided,
- U.S. export controls (i.e. EAR99, ECCN or USML),
- Where title will transfer from the seller to the buyer,
- Method of Payment,
- Relevant law, and
Country of Origin
The Country of Origin of a product is the last country in which the product was manufactured or significantly altered. This may be different from the country in which the supplier or manufacturer is located or where you purchased the product.
The country of origin of an imported product is defined in U.S. law and customs regulations as the country of manufacture, production or growth of any article of foreign origin entering customs territory of the United States. The customs territory of the United States is defined in General Note 2 of the Harmonized Tariff Schedule as the 50 states, the District of Columbia, and Puerto Rico and reference 19 C.F.R. §134.1.
According to the Congressional Research Service report of 2012, International Trade: Rules of Origin, there is no specific U.S. statute that provides an overall definition of rules of origin or country of origin. Instead, U.S. Customs and Border Protection (CBP)—the agency primarily responsible for determining country of origin (as it is for enforcing the tariff, customs, and other laws that apply to imported products)—relies on a body of court decisions, CBP regulations, and agency interpretations to confer origin on an imported product if the matter is in doubt.
Export Control Classification Number (ECCN)
The ECCN is an alpha-numeric classification found in the Commerce Control List of the Export Administration Regulations to identify items for export control purposes. An ECCN is different from the HS, HTS, or Schedule B numbers. EAR99 is not an ECCN, but a designation the item was not found on the Commerce Control List.
Harmonized Tariff Schedule of the U.S. (HTSUS)
The Harmonized Tariff Schedule classifies a good based on its name, use, and/or the material used in its construction and assigns it a 10-digit classification code number. There are more than 17,000 unique classification code numbers. Although the U.S. International Trade Commission publishes and maintains the Schedule in its various forms, U.S. Customs and Border Protection is the only agency that can provide legally binding advice or rulings on classification of imports.
According to the International Chamber of Commerce, Incoterms are an internationally recognized standard and are used worldwide in international and domestic contracts for the sale of goods. First published in 1936, Incoterms provide internationally accepted definitions and rules of interpretation for most common commercial terms. For help with Incoterms, download the free Incoterms® 2020 Rules Chart of Responsibilities and Transfer of Risk.