Commercial Invoices Key Terms

Know the key terms that are used on commercial invoices

Commercial invoices, documents used in foreign trade, work as customs declarations for a person or business sending goods over international borders. There is no standard format for a commercial invoice. However, there are several pieces of information that invoices must contain, such as the involved parties, what's being shipped, the manufacturing country and certain codes used for the goods. You'll need to know these commercial invoices key terms in order to fill them out properly.

Commercial invoice

The invoice itself is a document used by customs officials to classify materials, in order for duties and taxes to be assessed correctly. Although not all companies use the same commercial invoice to ship items internationally, there are several sections that each one uses, such as the exporter's and importer's information, the country of manufacture and a description of the items being shipped.

Tariff

The primary use of commercial invoices is to calculate tariffs. A tariff is money that's collected on goods when they're moved across political boundaries. They're usually imposed on imported goods, but can also be imposed on exported goods.

Harmonized system codes

Harmonized system codes are internationally standardized codes used for shipping goods that are listed on the commercial invoice. The code consists of six digits, the first four of which are referred to as the heading. The four and six-digit numbers refer to the same goods in every country that uses the harmonized system.

Air waybill

The air waybill is the ticket and passport for the item or items you're sending, which ensures that they are delivered. It is usually a number, and provides many pieces of information regarding the shipment for the shipping company, sender and customs.

Declaration

Some commercial invoices require a written declaration. The declaration usually includes a sworn statement from the company or person sending the exported material that indicates the materials are manufactured in the exporting country. The declaration also shows that the amount on the invoice is correct.

Letter of credit (L/C)

Some companies include a letter of credit on their invoices as a means of payment. A letter of credit is a legal document from the buyer's bank stating that the payment for the goods will be issued to the seller. The L/C assures the seller that he or she will be paid for the goods.

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