The request made to clear the payments of goods transport at the international level from one state to another requires a commercial invoice.
Commercial invoice templates are used by those businesses that deal with the trade of goods internationally. These invoices must keep a record for custom duties to avoid any trouble afterward. The templates for a commercial invoice are usually required by those businesses trading internationally and have a small setup.
A commercial invoice is not an ordinary document. Instead, it is a proper document on which all the details regarding the products or goods will be transported and their value in monetary terms. These invoices are equally crucial for the sellers and buyers as well. In addition, the customers will need the invoice to give the payment according to the number of units of a particular product purchased by them.
The custom agents of all the countries require a commercial invoice from the businessmen for various purposes such as:
- Checking and controlling the imports.
- Valuation of products.
- Classification of products.
- Determination of custom duty.
After analyzing all the required information, they impose taxes, tariffs, and duties on all the products as per standard values.
There is another type of invoice named pro forma invoice, which allows the seller and buyer to negotiate the payment rates of goods being sold and the expected delivery time. Then the commercial invoice is sent after the goods have been purchased.
A commercial invoice is a very significant document, so you should ensure that it is appropriately formatted to avoid any issues regarding your shipments. At this stage, you will need the commercial invoice templates on which all the things have already been mentioned with a proper space for entering all the information about your trading goods. These templates allow you to escape from any mishap regarding the commercial invoices being generated by your company.
Commercial invoice templates also save your time in the sense that all your trade goods will continue to be shipped without any barrier, and the trading process will run smoothly throughout. The templates for commercial invoices are available online, and you can download them easily according to your requirements and enter all the information by editing it.
Reasons to Use It
A commercial invoice is a crucial document template. All the businesses dealing at the international level require this document. There are many reasons why the commercial invoice template will be needed, and it is advantageous for businesses to have it. Some of the reasons for using commercial invoices have been given below:
Lessens the delay
The people of Customs check anything that has to be sent to another country. Suppose all the information regarding the goods transported internationally is mentioned accurately in an adequately documented form. In that case, there will be no delays in the delivery time of goods because the customs agent will check all the products with the help of a commercial invoice generated by your company.
The commercial invoice template acts as a sort of history of all the packages being exported out of the country because the information about its source and destination is also mentioned over it. In this way, the Custom will track the route of that particular shipment passing across different countries before reaching its destined location.
Informs Custom’s security
When there is no commercial invoice, the Custom agents will check all the products individually. It will ultimately cause a delay in the delivery time of goods because their transportation cannot proceed until passed by the custom agents. It will not affect one shipment only, but other shipments may also get delayed as a consequence.
So if a commercial invoice is already available in the documented form, then it will not take much time for the Custom agents to match all the details written in the invoice with the packages being exported. Moreover, the availability of commercial invoices will also show that your products are authentic and there is no problem with them.
How is Commercial Invoice Different from the Others?
The commercial invoice template is different from other such documents, but some people might get confused if they use it first and choose the wrong one. So to differentiate the templates of commercial invoice templates from that of other document’s templates, the distinguishing points have been elaborated below:
A simple invoice is a document that can be used by any company, even if it is dealing at the local level within the boundaries of a particular state, for sending the request of payment to the buyer.
But a commercial invoice is used for the trades being done at the international level. A commercial invoice template gives information about other details as well along with the payment request such as:
- Country of origin.
- Shipment date.
- Products’ weight.
- Harmonized System (HS) code.
- Freight terms etc.
A packing list contains only the information about the products that have been shipped along with the number of units that have been sent. The purpose of writing these details is that the buyer will be able to cross-check whether all the products have been sent according to the order or not.
But on the commercial invoice template, the total payment of the products is also mentioned along with the payment that has been given, which is pending from the buyer’s side.
CN22/23 form is used to give the shipment details, but it is required for those goods that will be shipped from European Union (UN) country. The products being transported from the EU may be delivered to
- Royal Mail (in the United Kingdom)
- PostNL (in Netherlands, Germany, Italy, Belgium, and the United Kingdom).
- Any other country outside the European Union.
So the shipments made from European Union to these specified countries will require CN22/23 form, but if the case is opposite and products are being delivered to the European Union, this form will not be needed.
On the other hand, the commercial invoice template is needed in any export or import being made across different country borders.
A tax invoice is generated to let people know about the exact amount of tax they will pay according to their sales. In addition, the details about Goods and Services Tax (GST) are also mentioned.
A commercial invoice template allows the people to know about the amount they will pay if they have bought the products from any international market.
How to Make a Commercial Invoice
It is essential to know that how a commercial invoice can be made. It is essential to understand because it will also help select an appropriate commercial invoice template for your business setup. Following are some of the essential elements which should be considered while making a commercial invoice:
The most important part of a commercial invoice template is its header, where all the crucial information regarding the buyer and the seller is mentioned. The information enlisted in the header includes:
- Name of the business
- Logo of the company
- Complete address
- Contact number
- City name
- Country name
- Postal code.
- Tax identification number
All these details should be enlisted in the header of the invoice from the perspective of both the buyer and the seller.
Invoice no. and Invoice date
Every invoice has its specific number named invoice ID. It should be written on the commercial invoice template because it will help in
- Avoiding the duplication of a particular payment that has already been received.
- Keeping the documents organized systematically.
The invoice ID can be given to a specific commercial invoice sequentially.
The other thing that should be written is the invoice date at which the payment will be made and is decided with the buyer and the seller’s consent.
Product and shipping details
In this section of the commercial invoice template, all the essential details regarding the product itself and the method of its shipment will be written. In addition, all the products which will be shipped are written on the list. These details are also crucial for the Customs department to quickly check all the products and their prices.
Following things should be made a part of this list:
Product description: The product description will include
- Name of the product.
- Short description of every product with its name.
- Product code.
- Packaging type etc.
Quantity: The short form of quantity can be used as “Qty,” in which the number of units of every product exported is written. It will also include the price of each unit of the product, and then the price of all the units will be summed up as the total values. In the end, the subtotal, including the total price of all the units of each product, will be mentioned in the invoice.
Units of measure: The net weight and gross weight of all the products will be written in this part. Net weight is calculated by weighing the products before they are packaged. On the other hand, the gross weight includes the product’s weight after its packaging.
Harmonized system code
There is a specific Harmonized System (HS) code for every product shipped. Three things can be recognized with the help of this code:
- Product type.
- Purpose of shipping the product.
- Nature of product.
These things are essential to know the customs department for imposing taxes or any excise duties on the particular products. In addition, the Harmonized System codes get updated every five years, so the product manufacturer should know about the updated codes to avoid any delay in the exports or imports.
Country of origin
The country of origin should also be mentioned in the commercial invoice template. The country of origin specifies the country where the product was manufactured. It is essential to write on the invoice because the customs agents will then impose a tax to be paid accordingly.
Payments terms and method
The method of payment and payment terms should be decided with the customer on a prior basis to avoid any delay of the payment. While deciding the payment terms between the seller and the buyer, the following things considerations should also be made:
List the price and value: The price for each unit of a specific product should be decided before the buyer’s order is confirmed. The price of a good may be different from that of its actual value, and it will depend on different factors, such as the number of units to be purchased because the seller may reduce the price per unit if the order is in bulk amount. The time duration between which the buyer wants to get the complete order delivered will also decide the price per unit of product because if it is urgently required, the seller may charge more price for it.
Identify the currency: As commercial invoice templates are used for international trade, the seller and buyer using the invoice will be from two different countries. Each country has its currency, so the buyer and seller should clarify with mutual consent that the buyer will make the payment in which currency.
Include payment method: Another vital thing to be included in the payment terms include deciding the method through which payment will be given to the seller. For example, it can be given as a cash amount through a check, credit card, online transaction, mobile transfer, etc. The payment method will also be decided before taking the order.
Terms of sale
The next thing is the terms of sale, which should be made a part of the commercial invoice template. It includes the information regarding different factors associated with the sales of goods, such as
Another term used for terms of sale is incoterms and includes the set of rules which should be followed while dealing with the trades at the international level. By following these rules, sellers and buyers would make the trade effectively. According to these regulations, the in-charge of shipping, insurance, custom costs, and transportation is decided before agreeing. The specified person will then be responsible for looking after the goods at every phase during the delivery of products.
Details of misc. Charges
All the other charges required for making sure that the products reach their destination appropriately are included in the section of miscellaneous charges available in the commercial invoice templates. These charges include:
- Transportation charges.
- Products insurance etc.
All the things mentioned above are crucial and should be a part of the commercial invoice templates. So you should check that all these elements are present in the template you have chosen for the commercial invoice of your business setup.
How to Use Commercial Invoice Template
All the businesses follow specific rules of using the commercial invoice templates. The following steps should be kept in consideration while using them:
Prepare the package
Ensure that the package contains the appropriate product that the customer has ordered. In addition, there should be proper space left for including commercial invoices in the package so that they cannot get misplaced at any time.
You can download free templates for commercial invoices available on our website, and then you can list all the details according to your requirements after editing the template. Downloading the already made template will assist you in making your commercial invoice error-free.
Add an invoice to the package.
When all the information regarding a particular package has been written on the commercial invoice template, you will have to attach it to the package. For this purpose, you can attach it outside the package with scotch tape so that details about the product placed inside can be read from the outside, and the package will not need to open.
Send the package
After ensuring that all the details are accurate and the invoice has been placed appropriately, you can send your package for transporting it.
Following are free editable commercial invoice templates for you:
How to Calculate VAT?
The second tax to calculate is VAT. You can see the different types of VAT, I leave them here to give you an idea:
Super-reduced VAT (4%): for bread, milk, fruits, cereals, cheeses, books, non-advertising newspapers and magazines, medicines, wheelchairs, prosthetics, and VPO.
Reduced VAT (10%): food in general, transport, plants, amateur sports shows, …
General VAT (21%): applies to almost all products and services, except those included in the super-reduced or reduced VAT. The most common is that you have to create invoices in this type of VAT.
VAT Exempt (0%): it is very rare that you have to issue a VAT-exempt invoice unless it is an export.
(Mentioned rates were updated on 06-01-20)
You can check the different types of VTA across Europe over here in detail.
How to calculate the total amount
The total amount of the invoice is calculated depending on whether you have had to include VAT and Personal Income Tax on your invoice. Therefore, 3 different cases could happen to you:
Invoice without VAT without IRPF withholding: it is very rare, but in this invoice, the total amount would be equal to the tax base.
VAT invoice without IRPF withholding: the total amount would be a Taxable base + 21% of the taxable base (or 10% or 4% if applicable).
Invoice with VAT and withholding of personal income tax: the total amount would be as follows -> Tax base + VAT (21% / 10% / 4% x tax base) – Income tax withholding (7% / 15% x tax base).
The commercial invoice template can be used for various purposes, and it has many benefits as well. For example, it helps get information about the items being transported internationally, requesting for the payment to be transacted, and goods will pass through the customs without any objection.
The government officials can use commercial invoices to decide the amount of tax that a particular company will pay according to its sales rate. Moreover, it allows the buyer to claim products’ insurance in case of any damage. Therefore, the seller should have a copy of the commercial invoice template, and a copy of it should also be sent to the buyer for keeping proof of track record of all the products.