Delivering on the promise #1: the Export Invoice

Delivering on the promise #1: the Export Invoice

Back when we were talking about UN Standards and Proformas, we looked at the way the Proforma is a statement of your contract of sale – it’s a promise between you and your customer, that you will deliver and they will pay.

Now that we’ve looked at the process, let’s look at the documentation on the delivery of the goods your customer ordered. In this article, the Export Invoice (also known as the Commercial Invoice); in the next, the Packing List. There are other documents you’ll likely use, and we’ll cover them afterwards, but these two are central. Whatever other documents you need to achieve delivery, these two must always be there.

What is it for?

An Export or Commercial Invoice has two functions:

  • to act as a Bill of Sale, telling your customer how much to pay, and when and how to pay it, and what they are paying for;
  • to act as a Customs document, telling both outbound and destination customs what the goods are, the applicable Harmonised Code, and the value of the goods.

Each function is as important as the other, which is why an Export Invoice must have more  information than a standard invoice.

What’s required?

Back in our article “All the Pretty Ducks in a Row“, there’s a list of all the required information for a Proforma. The information required on your Export Invoice is the same, with two exceptions: Lead Time and Transit Time. Let’s take a look at each of the sections:

Parties:

This section appears at the top left of your Export Invoice, right below the line that says “Export Invoice”.  It contains three boxes: Shipper, Consignee and Notify Party. What are they?

Shipper is the individual or company that is the exporter of record. This is required because this is not a simple instrument of payment; it’s also a clearance document. Where export permits are required, this is the party that must hold the export permit; it’s also the party that local Customs will contact if more information is required.

Consignee is the individual or company that is the importer of record, for similar reasons; they’re not only the party that will receive the goods, but they must be the holder of any import permit required at destination. In the case of a Letter of Credit, this might be the bank.

Notify party doesn’t always have any information, but it’s there if a third party at destination needs to be notified when the goods arrive – for instance, a Customs Broker or Import service provider who will deal with the clearance at destination.

Transaction information:

This group of data includes any Buyer’s Reference to be used, for example a Purchase Order number; the Exporter’s Reference, which is your reference, such as a Shipment Number or Job Number; the Invoice Number, the Incoterm to be used for the transaction and the method of payment or payment terms for the transaction.

Incoterm and method of payment are not the same; the Incoterm covers the assignment of risk in transit, as well as who is paying for what. See Taming the Bureaucracy for some more detailed information on Incoterms – there are links to further information in the Incoterms section of that article.

Shipment and transport information:

Aside from the Incoterm, this group of information is most of what’s required for Customs. Data such as the Country of Origin and Destination will tell Customs whether Import Permits for the destination are required before outbound shipments can be released. Each of the following items must be included.

  • Country Of Origin – the country where the goods are manufactured or produced;
  • Country of Final Destination – the country the goods are to be shipped to;
  • Port of Loading – the port the goods are to be shipped from;
  • Port of Discharge – the port the goods are to be shipped to;
  • Final Destination – location of delivery if not port of discharge;
  • Shipping method and transport information (flight or voyage numbers, for instance).

Cargo information:

This part of the Export Invoice is used by both your customer and by Customs. Destination Customs will use this information to determine whether and how much duty and tax should be levied on your customer at import time. You must include all the following information:

  • Quantity;
  • Description of Goods;
  • Harmonised Code of the goods;
  • Price;
  • Insurance and freight if priced separately (these items are not dutiable so should be separated if possible);
  • Currency to be used for the transaction.

Your payment information:

  • Name of your bank – the branch address isn’t needed, as your BSB/Sort Code will give that;
  • Account name;
  • BSB or Sort Code & Account Number;
  • SWIFT or BIC  – International Bank Identification Code.

Formalising information:

  • Place of issue of the Invoice (your city);
  • Date of Issue;
  • Name of Authorised Signatory;
  • Authorised Signature.

 Layout and the UN standard

We showed the layout for the Proforma Invoice in the article The Allure of a Well-Turned Proforma. The layout for the Invoice is virtually the same:

Next time, we’ll take a detailed look at the Packing List – another core document for your Export shipments.

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