Commercial Invoice
A commercial invoice is the seller's statement of the sale—description, quantity, unit price, total, and Incoterm—and the core document for declaration, valuation, payment, and clearance.
A commercial invoice is the seller's core document recording the transaction, normally listing both parties, product descriptions and specifications, quantity, unit price and total, currency, the Incoterm, payment terms, shipping marks, HS code, and country of origin. It is both the proof of sale and the buyer's basis for payment, and the foundation for export declaration, import customs valuation, certificate-of-origin issuance, and bank settlement/negotiation.
The invoice price directly drives the destination customs value and the duty and VAT payable, so customs authorities are highly sensitive to invoice authenticity. The invoice must clearly state the Incoterm (e.g., FOB, CIF), since this determines whether freight and insurance are included in the price and thus affects customs valuation and the cost boundary between buyer and seller. Distinguish it from a proforma invoice (a quotation/preliminary document with no settlement obligation), which is used for quoting, opening L/Cs, and prepayment; the commercial invoice is the formal post-sale document for settlement and clearance.
For Chinese exporters, the commercial invoice must achieve 'document-to-document agreement'—fully consistent with the customs declaration, packing list, B/L, L/C, and certificate of origin. Common pitfalls include the invoice description not matching the L/C terms (causing refusal of payment), a price clause inconsistent with reality (raising customs questions or under-declaration risk), omitting clearance-required data such as HS code and country of origin (causing destination holds), and inconsistent currency, amounts, or marks across the document set. Build a standard invoice template and check every field before shipment.
FAQ
- What is the difference between a commercial invoice and a proforma invoice (PI)?
- A proforma invoice is a quotation/preliminary document used to confirm orders, open an L/C, or collect prepayment; it is not a formal settlement document. A commercial invoice is issued for the actual, shipped transaction and used for declaration, clearance, and settlement. They look similar but differ in purpose and legal effect.
- Must the invoice show the Incoterm and HS code?
- Strongly recommended. The Incoterm determines whether freight/insurance is included and affects customs valuation and cost allocation; the HS code and origin ease destination classification and clearance. Missing fields often cause destination holds, valuation disputes, or delays.
- The buyer asks me to lower the invoice value—is that OK?
- Not advisable. Under-valuing the invoice helps the buyer evade import duty; if destination customs catches it, both parties may face back duty, fines, or even criminal liability, and it jeopardizes China-side FX and rebate compliance. Always invoice at the true transaction value.
Related terms
Sources: https://iccwbo.org/business-solutions/incoterms-rules/ · https://www.trade.gov/commercial-invoice