Most of us have a pretty good idea what an invoice is. If you buy something on terms from a business, they will most certainly send you an invoice that indicates how much you owe, when payment is due, and how to remit that payment.

Certain data may be required on an invoice for exports that may be unnecessary on a domestic invoice, because an invoice for exports serves not only as a bill of sale, but also as an important customs document needed to meet the requirements of the customs authority of the country of import.

The invoice is often used as the basis for assessing customs duties; in other words, the customs authority in the country of import uses data on the invoice to calculate how much tax the importer must pay.

Today we’ll explain how to create an invoice when exporting products from the U.S. to foreign countries.

Proforma Invoice vs. Commercial Invoice

Download Sample of Commercial Invoice

When discussing invoices used for international transactions, the more specific terms proforma invoice and commercial invoice may be used to distinguish two distinct yet closely related export forms.

A proforma invoice plays the same role as a formal quote; it is presented to a potential buyer before they have made the decision to move forward with placing an order. A commercial invoice acts as a bill of sale; it is issued once the order has been placed.

Basic Invoice Requirements

The U.S. government does not publish specific rules regarding what data is required on an invoice or how an invoice should be formatted. However, best practices can be gleaned by referencing the World Customs Organization’s standards as well as guidance provided by the International Trade Administration’s website.

Contact Information

Like a domestic invoice, an invoice used for exports should have the basic contact information of the seller and the buyer, but it may use different vocabulary. The seller becomes the exporter, and the buyer becomes the ultimate consignee or end user.

Ultimate consignee and end user are synonymous; they both refer to the final intended recipient of the goods. This may be different from the party that submits payment (the buyer, purchaser, or bill-to party) and, if so, the contact information for both the ultimate consignee and the bill-to party should be included on the invoice.

(The Foreign Trade Regulations introduce another set of terms for the seller and the buyer: the U.S. Principal Party in Interest or USPPI and the Foreign Principal Party in Interest or FPPI. While these terms don't typically appear on an invoice, they can come up during the export process. For a more detailed overview of USPPI and FPPI, see the article, USPPI vs. Exporter: What’s the Difference?)

Intermediate consignee refers to any entity that takes possession of the goods for a portion of the time they are in transit for the purpose of effecting delivery to the ultimate consignee. This may be an international freight forwarder or transportation company. Their contact information should be included on the invoice as well.

The invoice may also include details about the exporting carrier, including the name of the exporting carrier and the loading pier or terminal upon which the goods will be loaded for transport from the U.S. to a foreign country.

Product Information

Harmonized System (HS) is a standardized product classification system adopted by most countries. HS codes for each product may be required on the invoice by your foreign customer or their country’s customs authority. The first six digits of an HS number are uniform throughout the world, but each country may add additional digits to further specify products, and these additional digits are different in each country.

Because of this, it is generally considered best practice to only list the six-digit code on the invoice to avoid miscommunication. However, there are exceptions to this rule, and there are reasons Why You Shouldn’t Include HS Numbers on a Commercial Invoice.

Legal Clauses, Phrases or Statements

The Destination Control Statement—also known as the Anti-Diversion Clause—is a legal statement that indicates the goods are destined solely for the ultimate consignee and are not to be diverted to any other party. This is required under the Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR) for controlled items. See the article, What Is the Destination Control Statement and Why Should It Be on Your Commercial Invoice?

There may be other statements that need to appear on the invoice, such as a simple statement (e.g. "Value for customs purposes only.") placed on the invoice indicating that the values listed are used for customs purposes only and do not reflect the actual cost to the buyer. This statement may be used if the shipment is between two related companies or for shipments that are returns for repair or recalibration.

See the articles, Export Compliance: Using the Proper Value on a Commercial Invoice and Repaired Goods: Import and Re-Export.

Payment and Delivery Terms

For domestic transactions, the most common terms of sale are some variation of FOB origin or FOB destination. While FOB (Free on Board) has one meaning in the U.S., it actually has a different meaning internationally.

Incoterms 2010 are internationally recognized delivery terms maintained by the International Chamber of Commerce (ICC) that are meant to communicate the costs, tasks and risks allocated to the seller and the buyer in an international transaction. They outline which party is responsible for paying for transportation, insurance and import taxes. Their use is not legally required, but agreeing upon an Incoterm with your foreign buyer can help prevent miscommunication.

For a more detailed discussion of payment and delivery terms, see the article, Terms of Trade: Uniform Commercial Code and Incoterms 2010.

Situational Invoice Requirements

Each country has its own set of import regulations. The requirements for importing a good into China may be significantly different than the requirements for importing the same product into Mexico.

Your foreign buyer may have their own unique requirements as well, which may or may not overlap with requirements imposed by their government. Your customer may request that you format your invoice in a particular way or include certain data elements that you don’t usually include.

Situational invoice requirements include, but are not limited to:

Country of origin of each product.

Prices in currency other than U.S. dollars.

Invoice in language other than English.

Additional certifications or statements required by the country of import.

Any other requirements outlined in the sales contract.

It is important to have a clear and thorough discussion with your foreign buyer so that you understand what they require. What you agree upon should be clearly outlined in the sales contract. This will help ensure that your goods get shipped on-time and within compliance, establishing a healthy long-term relationship with your customer.

Try to find a freight forwarder with experience in the region you are shipping to, as they can be a key resource in helping you navigate foreign country import requirements.

The U.S. Commercial Service has offices in the U.S. and in countries across the world. Their mission is to assist U.S. companies engaged in exporting through all stages of the export process. Their trade professionals can help you understand country-specific import requirements (including what data is required on the invoice), gain financing for your exports, and can even connect you with foreign buyers.

Closing Thoughts

Keep in mind, the invoice is likely not the only document that you’ll have to prepare for your export shipments. You may have to provide a variety of other documents such as a packing list, certificate of origin, shipper’s letter of instruction, bill of lading, or dangerous goods declaration.

Shipping Solutions export documentation and compliance software automates the process of creating more than two-dozen standard export forms. It eliminates redundant manual data entry to help you create more consistent, accurate export paperwork, file through the Automated Export System (AES), and perform your trade compliance duties, all in one place.

( Melissa )04 Jan,2018