The information contained in invoices includes details about the buyer and seller, the contents of the shipment, their price, terms of sale, insurance costs, country of origin, and the Harmonised System (HS) codes.įor anyone, the differences between some of these shipping documents can be confusing. How customs authorities process invoicesĬustoms authorities in all countries typically use invoices to determine whether the goods in question may be exported or imported - for instance, in the case of restricted goods. Ultimately, it’s up to you to decide which type of invoice is best for your needs. For instance, if you are still working out the final details of a transaction with a buyer, such as price or delivery terms, a pro forma invoice can be helpful in confirming the details of the purchase. That being said, there may be some situations where a pro forma invoice makes more sense. This is because commercial invoices are generally more binding than pro forma invoices and can be used as supporting documentation in case of any disputes. If you’re not sure which one to use, it’s always best to err on the side of caution and go with a commercial invoice. The type of invoice you should use will depend on your individual circumstances. However, in some cases, a commercial invoice may be issued before shipment if the buyer has made advance payment. This is because they can help determine the value of goods being imported into a country for tax assessment.Īlso, a commercial invoice should be used when the buyer has already paid for the goods being shipped, as it serves as a legal bill for the transaction. This is especially so in international trade transactions, as commercial invoices are often used for customs purposes. This is because they provide a more accurate picture of the transaction and can be used as supporting documentation. In general, commercial invoices are used for exports that are either high value or regulated in some way. It’s issued after the goods have been shipped and includes all relevant information about the transaction, such as what was sold, how much it cost, when payment is due, etc. What is included in a pro forma invoice?Ī pro forma invoice typically includes the following information:Ī commercial invoice is a bill for the goods or services sold. This allows both parties to budget for the transaction and avoid any surprises when the final invoice is issued. The main purpose of a pro forma invoice is to provide an estimated cost of goods being purchased. One example of a pro forma invoice is a customs invoice. It’s often used in international trade transactions when the buyer and seller are located in different countries and need to agree on terms before goods are shipped. Thus, a pro forma invoice is not a binding document rather, it’s more of an offer from the seller to provide certain goods at a specified price. “Pro forma” is Latin for “as a matter of form” and is used to describe something that has been done or provided as a courtesy or tradition rather than for a legal reason. It will describe in detail what a commercial invoice and pro forma invoice is, so that you can decide which is more applicable in your case. This article serves as a guide for anyone that wishes to export products from Malaysia to regions such as Europe, North America, and Oceania. This type of invoice is generally accepted as evidence of a debt owed by the buyer to the seller. It’s a bill for the sale, detailing what was sold, how much it cost, and when payment is due. A commercial invoice is issued after the goods have been shipped. It outlines the kind and quantity of goods, their value, shipping costs, and any other charges that will be due on delivery.Įssentially, it’s an offer from the seller to provide certain goods at a specified price. A pro forma invoice is created by the seller and submitted to the buyer in advance of shipping goods. Basically, the main distinction is that one is used as an estimate while the other is a bill for goods sold. Pro forma and commercial invoices are commonly used in global trade.
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