What is a commercial invoice? Definition & how to create one

Doing business internationally adds another layer of financial and regulatory complexity.

One simple yet important factor that business leaders need to consider is the use of commercial invoices to support customs clearance, duty assessments, and international sale and purchase compliance.

In this article, we’ll detail what a commercial invoice is, the key functions and roles they play in international trade, and how to create one yourself.

What is commercial invoice?

A commercial invoice is a key legal document in international trade that serves as a sales contract between the buyer and seller. It’s essential for customs clearance, as it outlines the goods’ value, quantity, and description—information used to calculate duties and taxes. Beyond compliance, the commercial invoice also functions as a payment request and supports foreign exchange transactions or payments made through a letter of credit.

• The goods being sold
• Their value
• The terms of the transaction

It is a critical document in international trade, serving as the basis of customs declarations, duty assessments, and clearance processes.

The commercial invoice isn’t just a piece in the compliance process, however. It also acts as proof of sale and provides important information for other aspects of international trade, such as shipping, insurance, and payment.

Key functions of commercial invoices

The commercial invoice serves five critical functions in international trade:

1. Customs clearance: The main purpose of the commercial invoice is to help customs authorities verify the nature, value, and quantity of goods being imported so that they can accurately calculate duties and taxes.
2. Proof of sale: The commercial invoice also provides documented evidence of the transaction between the buyer and the seller, just like a standard invoice.
3. Payment request: The invoice acts as a formal request for payment, outlining amounts due and terms of settlement.
4. Shipping information: It also includes details such as product descriptions, quantities, and delivery terms, all of which support logistics and insurance.
5. Contract of sale: The invoice establishes the obligations of both parties, making it a legally binding record of the agreement.

Essential components of a commercial invoice 

A commercial invoice only serves its intended purpose if it includes these essential components:

• Seller and buyer information: This typically includes names, addresses, and contact details of both parties.
• Detailed goods description: A clear identification of the products, including quantity, weight, and any identifying marks or codes to support customs clearance.
• Shipping details: Information about the mode of transport, delivery terms, and destination is often included.
• Value of goods: The total value of the shipment, with currency specified, is essential for customs and duty assessments.
• Payment instructions: Agreed payment terms, methods, and deadlines to support accounts payable and receivable teams.
• Other relevant information: Additional details may also be included, such as country of origin, insurance coverage, and special handling instructions.

Importance of commercial invoices 

In international trade, commercial invoices do more than just record the sale. They support by streamlining customs processes, protecting both parties against risk exposure, and keeping goods moving smoothly across borders.

Avoiding delays

A properly completed commercial invoice helps prevent hold-ups at customs, while missing or inaccurate information can cause inspections, fines, or even shipment seizures.

Supporting duty assessment

The commercial invoice provides the basis for calculating tariffs, taxes, and duties. It states the value, quantity, and origin of goods, helping customs officers assess duty more easily and effectively. 

Facilitating international trade

One of the most important facets of the commercial invoice is that it is a standardized record that is recognized across the world.

This helps create transparency for all parties and supports easy collaboration between buyers, sellers, carriers, and customs.

Supporting financial transactions

The commercial invoice, just like a regular invoice, also acts as a payment request.

This helps keep financial agreements clear and enforceable, reducing disputes and improving trust between trading partners.

Reducing legal and commercial risk

As a binding record of the transaction, the invoice protects both sides in cases of disagreement, insurance claims, or compliance checks.

How to create a commercial invoice 

A clear process for creating commercial invoices helps you ensure you create a compliant, accurate invoice every time.

Here’s a quick overview of the process. Tweak it to your needs.

1. Enter legal names, full addresses, phone and email for both parties.
2. Add invoice data (invoice number, invoice date, and customer purchase order or reference number).
3. Specify the consignee and delivery address.
4. State the currency used for prices and totals.
5. Record the agreed incoterm and named place to clarify who pays for freight, insurance, and duties.
6. Provide plain-English product descriptions, model or SKU, quantity, unit of measure, and packaging marks.
7. Add the HS classification code for each item and the country of origin.
8. List the unit price for each item and calculate extended line totals.
9. Add non-product charges, such as freight, insurance, handling, discounts, and any other charges that should be included for customs valuation.
10. Sum line items and additional charges to show the invoice subtotal and grand total.
11. Provide shipping details, including the mode of transport, carrier, vessel, or flight number if known, number of packages, gross and net weight, and dimensions if required.
12. State the payment method, due date, bank details, and any collection instructions.
13. Include any required legal statements and sign and date the invoice. Add the name and title of the authorized signatory.
14. Reference or attach the packing list, certificates of origin, licenses, or insurance certificates if applicable.
15. Perform a final review to confirm that descriptions, quantities, and values align with the purchase order, packing list, and transport documents.

Templates and tools available for invoice creation 

Creating a commercial invoice can be a long process, given how much information needs to be included to support compliance and customs clearance processes.

Thankfully, there are a number of helpful tools out there that can support the invoice creation process, supporting speed and consistency. These include:

Your accounting or AP/AR platform might have a built-in invoice form, and freight forwarders and trade advisors regularly have templates available.

From there, tools like HS code and duty look-up tools from customs authorities and trade portals are a good way to speed up invoice creation, and document management tools like Google Drive are always a good move for keeping invoices organized and easy to locate.

Best practices for ensuring compliance and accuracy 

Ensuring your commercial invoices are accurate and meet international standards helps streamline international transactions and prevent hold-ups at customs.

Here are five important best practices to integrate into your own invoicing practices to support compliance and accuracy:

1. Use clear product descriptions and consistent data: Describe goods in plain language and include HS codes for customs purposes.
2. Align documents and terms of trade: Make sure that invoice data matches supporting documents line by line, and that you’ve applied the correct incoterms and named place to avoid confusion over who is responsible for freight, insurance, and duties.
3. Show accurate value and origin of goods: Be sure to itemize freight and insurance when required, and identify the country of origin for each item, and attach any certificates or permits where necessary to meet customs requirements.
4. Verify details and check calculations: Before issuing the invoice, confirm importer and exporter information, tax IDs, and any license numbers. Double-check arithmetic, rounding, and unit conversions to maintain accuracy.
5. Proper recordkeeping: Protect yourself against future revisions by keeping copies of commercial invoices along with supporting records. Maintaining an audit trail for the period required in each jurisdiction is essential for compliance.

Commercial invoice vs. other shipping documents 

Commercial invoices are not the only documents used in international trade and shipping.

Let's explore how commercial invoices stack up against two other common documents: packing lists and pro forma invoices.

Commercial invoice vs. packing list

A packing list is not a financial or legal document.

Instead, a packing list provides a breakdown of the shipment’s physical contents (like quantities and weights, supporting the invoice but not replacing it.

Packing lists lack pricing and contractual details, meaning they can’t be used by customs to assess duties or taxes. Instead, their role is logistical, helping carriers, warehouse staff, and buyers verify that the right items and quantities have been shipped.

Commercial invoice vs. pro forma invoice

A pro forma invoice is issued before shipment to outline the intended sale, often used to apply for import licenses, secure financing, or provide buyers with a cost estimate.

It is not legally binding (unlike the commercial invoice), and can’t be used for payment or customs purposes.

Common mistakes to avoid when preparing a commercial invoice

Even small errors in a commercial invoice can cause major setbacks. Inaccuracies may lead to customs delays, unexpected fines, or shipment holds, and they damage trust between trading partners.

The most common mistakes to watch for include:

• Missing or inconsistent information (such as HS codes, product descriptions, or country of origin)
• Undervaluing goods or omitting charges like freight and insurance costs
• Incorrect or unclear incoterms, creating confusion over who is responsible for costs and risks during transport 
• Lack of signatures and recordkeeping, undermining the invoice’s legal standing and putting compliance at risk

Importance of proper documentation in international trade 

Proper documentation is the backbone of cross-border trade. Missing or inaccurate paperwork can stall shipments, add costs, and damage business relationships.

Role of commercial invoices in customs and duties

Customs authorities rely on commercial invoices to calculate tariffs, duties, and taxes.

Naturally, if the information on an invoice is incorrect, inaccurate, or missing, then it becomes difficult for these authorities to do so effectively. When details such as product value, origin, or classification are missing, shipments are more likely to be delayed or rejected.

A well-prepared invoice ensures that goods clear customs smoothly and that businesses remain compliant with international regulations.

Impact on shipping timelines and costs

Errors or omissions in documentation can directly increase shipping costs.

For example, delays at customs can lead to storage fees, demurrage charges, or missed delivery deadlines, all of which push up the overall cost of delivery.

But when your commercial invoice is accurate and complete, you reduce the risk of extra inspections and speed up clearance, helping businesses keep logistics costs under control.

Best practices for document management in logistics

Follow these best practices to improve document management and ensure your commercial invoices don’t become the weak link that pushes up expenses:

• Keep invoice data consistent with purchase orders, packing lists, and other trade documents
• Use digital platforms for version control, centralized storage, and easy retrieval
• Standardize templates and formats to reduce errors across teams and partners
• Conduct regular reviews or audits to ensure compliance with customs requirements
• Train staff in documentation standards to minimize mistakes and delays

Get your free commercial invoice template

Commercial invoices are a critical component of doing international business.

But just because they’re important doesn’t mean that they need to be time-consuming to create and use.

Using a template is always a smart idea, helping you to ensure consistency and get invoices out fast. That’s why we’ve created a free, ready-to-use commercial template.

Download BILL’s free commercial invoice template.