Is your shipment being held at the customs? Odds are, this situation could have been easily prevented with a commercial invoice that adequately describes your transaction details. Analysis conducted by W2C’s team of experts revealed that the lack of crucial information on the commercial invoice is one of the leading causes of customs delays.

When it comes to customs transactions, the secret to success is a clear and complete commercial invoice wherein the seller, the buyer and the shipped goods are clearly identified. Until they receive this information, customs officers will not let the goods through, as the commercial invoice should allow them to determine whether the transaction complies with current regulations.

You will find listed below some of the most common invoice mistakes:

• The invoice fails to specify one of the parties involved. All too often, invoices don’t specify the seller, the buyer and the consignee (the receiver of the shipment).
• The invoice does not specify whether the parties involved are related (for instance, two branches of the same company).
• The invoice does not specify the customs broker responsible for the customs clearance.
• The invoice lacks important information on the shipped goods.
• The invoice does not specify the goods’ country of origin.
• The invoice fails to specify the HS number.
• The invoice does not specify the currency in which the goods’ value is given.

A good commercial invoice needs to have at the very least the information seen in the screenshot below:

As for the goods being shipped, you need to specify at least the following elements in your invoice: the item number, a description of the items, the country of origin, the HS code, the quantity shipped, the unit price and the total value. The screenshot below contains a good example of this:

Additionally, if you are shipping goods that are subject to control by a government agency (Health Canada, the FDA, the SAQ, Transport Canada or others), you need to write any relevant information, such as a permit/license number, a ruling number, an import license and so on, in the relevant invoice section or in the notes section.

Is there a standard commercial invoice template?

Unfortunately not, since the requirements for a commercial invoice can vary significantly from one field of business to another. However, the information detailed above is required in any commercial invoice.

It is very important to ensure your invoice is clear enough for the customs officers to easily identify all the parties involved in the transaction. To let your invoice be understandable by all, English should be your language of choice, as English terms are widely understood throughout the world.

So where should you start? If you are a small company with no logistical resources, W2C’s consulting team can help you create a commercial invoice template suited for your company’s needs.

Can I use my accounting invoice to ship my goods?

Many clients ask this question. The accounting invoice that is used to bill products to the customers’ accounts payable department is similar to the commercial invoice, but lacks the necessary information for an easy passage through customs. This missing information includes:

• The shipping address
• The relationship between the parties involved
• The incoterms
• The customs broker’s name
• The quantity, weight and size of the goods shipped
• The goods’ country of origin
• The HS codes of the items

Due to this, most companies do need to prepare a special invoice for shipping. It is also known as the “pro forma invoice” in some companies.

Even though it adds a lot of work, you need to have such an invoice to make sure your goods will pass through customs. Some applications do exist that can be paired up with ERP systems to simplify the process. Certain companies opt to create their own commercial invoice-generating programs using the crucial information stored in their database. If you are using such a custom program, be aware that you need to update its parameters at least yearly to ensure all changes to the customs tariff are considered. You are fully responsible of ensuring your exports are compliant with the new regulations.

Should my suppliers have a good commercial invoice?

Absolutely, as it will ensure an easy passage through customs. Have your buyers ever complained that their goods are not arriving on time? Shipping delays can have very costly consequences for a company, such as production delays, wasted time for customer service representatives, overtime, and customer penalties.

Additionally, if your incoterm is any other than DDP, it means that you are the designated importer. As such, you are responsible for any information on the customs declaration. For any erroneous information during the import, you will be penalized and charged by the CBSA.

In your own best interest, your suppliers should therefore be able to properly fill out a commercial invoice. Your buyers should understand that it is their responsibility to ensure that the commercial invoice is compliant.

W2C can assist you in this undertaking to help your buyers gain a better understanding of the designated importer’s responsibilities and to help you negotiate with suppliers in foreign countries.

Conclusion

In order to let the shipped goods pass easily through customs, the importer of record must make sure to transmit the information as clearly as possible, describing the transaction in detail and specifying the nature of the goods crossing the border. If everything is done in compliance with the rules, there is little risk of your shipments getting held. For any questions or to receive more detailed information on the topic of commercial invoices, please contact the W2C team to receive customs training based on your business reality.