If you run a business that involves shipping your products, you may end up shipping them abroad at some point. In these instances, you will likely need to fill out a commercial invoice.

In this article, we’ll explain what a commercial invoice is, what information goes on it and why it’s important. The topics we’ll cover include:

  • What is a commercial invoice?
  • What information should I include in a commercial invoice?
  • Why is a commercial invoice important?
  • Commercial invoices and Countingup

What is a commercial invoice?

A commercial invoice is a document that you must include with any package you ship to other countries. If you’re looking to start an e-commerce business, it’s a good idea to familiarise yourself with documents like these, so you don’t have any problems when shipping packages.

Among other things, a commercial invoice contains information on what kinds of things you’re shipping. The invoice is a legal requirement, so you’ll need it regardless of the shipping solution you use to send items.

The invoice helps customs agents transport your package correctly, as some objects require special treatment when you ship them long distances. For instance, if you’re sending flammable chemicals, pressurised containers, or even lithium batteries abroad, you must take special care to transport them correctly. 

If you’re sending a package that requires a commercial invoice, you must include three copies. You need to attach two copies to the outside of your package — these are for the customs departments of your country and the receiving country. Then you place the third one inside the packaging along with the items, as this copy is for the customer. 

What information should I include in a commercial invoice?

There’s quite a lot of information that needs to go on a commercial invoice. We’ll list the mandatory things you must include below, but if you’re worried about the format, check online for commercial invoice templates. A good template will mean your information will be clearly visible and easily understood by any customs agent that deals with it. 

Please note that all commercial invoices must be written in English, regardless of the national language of the receiving country. 

Your address and the customer’s address

You must write your business address on the invoice (this might be your home address if you run your business from home) as well as the address you’re sending the items to.

Tariff code and a description of your items

A tariff code is a number that classifies your goods for customs records and tax purposes. Although you must also provide a brief description of what you’re sending, most automated systems will rely on your tariff code. Use the UK government website to find the correct tariff codes for your items.

Reason for export

You must explain the reason you’re sending your goods abroad. For small businesses, the reason will be “trade” or similar.

Value of your items 

You must mark down the value of the items you’re sending, both in your currency and that of the receiving country.

Terms of sale (or ‘Incoterms’) 

In this section, you’ll state who is responsible for the items during their journey. To find out what incoterms you should use, check the International Chamber of Commerce website.

VAT and EORI numbers 

These are numbers you must apply for with HMRC if you are going to be trading internationally. You can get an EORI number using the UK government website, and you can check out our article for more info on getting a VAT number.

Your signature

A signature is necessary as it means that everything on the invoice is true and correct to your knowledge. Adding your signature makes you liable if you fill the invoice out incorrectly.

Why is a commercial invoice important?

For you and your business, a commercial invoice is important as it ensures your package gets where it’s going as soon as possible. Without a commercial invoice, your package would not be able to leave the country, as customs could not identify it without the invoice.

An accurate commercial invoice is also necessary to ensure items are taxed correctly. If you fill out your invoice incorrectly, customs might charge you too much tax, so take care with your invoices to avoid unexpected costs.

The tariff codes and description of the package contents on a commercial invoice are vital for safe and secure shipping, as many products require special considerations during shipping. Different countries may also have laws on transporting certain products over their borders, and commercial invoices prevent illegal imports and exports.

Finally, commercial invoices are important as they provide a legal document to refer to if there are delivery issues. A correct invoice will include all the information you’ll need to work out who was responsible for the package at every point of its journey, so you can identify who is at fault for delivery issues. The commercial invoice also serves as a legal bill of sale, which prevents your customer from avoiding payments

Commercial invoices and Countingup

Commercial invoices combine a lot of different financial aspects. When you create and use a commercial invoice, you’ll need to deal with things like different currencies, shipping costs, the value of your products, and import/export taxes. All this information can make financial management confusing, so consider using financial management software to keep things simple. Countingup is a great example of this kind of software. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here.