Commercial Invoice vs Proforma Invoice: Key Differences Explained

When shipping goods internationally, understanding the difference between a commercial invoice and a proforma invoice is crucial. While they may look similar, they serve very different purposes in the export process.

What is a Commercial Invoice?

A commercial invoice is a legal document issued by the seller to the buyer. It serves as:

• A bill for the goods sold
• A customs declaration document
• Proof of transaction for customs authorities
• The basis for calculating import duties and taxes

Key Features of Commercial Invoices:

1. Legal Document: Used for customs clearance
2. Final Pricing: Contains the actual price the buyer pays
3. Tax Calculation: Customs uses it to assess duties
4. Required: Mandatory for all international shipments

What is a Proforma Invoice?

A proforma invoice is a preliminary bill sent before the actual shipment. It's essentially a quote or estimate that provides:

• Preliminary pricing information
• Description of goods to be shipped
• Estimated costs and delivery terms
• Information for import licenses or letters of credit

Key Features of Proforma Invoices:

1. Not a Legal Document: Cannot be used for final customs clearance
2. Preliminary Pricing: Shows estimated costs
3. Pre-shipment: Issued before the actual transaction
4. Optional: Not always required

When to Use Each Type

Use a Commercial Invoice When:

• ✅ Shipping actual goods
• ✅ Finalizing a sale
• ✅ Clearing customs
• ✅ Claiming payment

Use a Proforma Invoice When:

• ✅ Providing a quotation
• ✅ Applying for an import license
• ✅ Opening a letter of credit
• ✅ Securing advance payment

Key Differences at a Glance

| Feature | Commercial Invoice | Proforma Invoice | |---------|-------------------|------------------| | Purpose | Final bill of sale | Preliminary quote | | Legal Status | Legal document | Not legally binding | | Customs | Used for clearance | Not for customs | | Payment | Actual payment terms | Estimated pricing | | Timing | After shipment | Before shipment |

Best Practices

1. Always issue a commercial invoice with actual shipments
2. Use proforma invoices for quotes and pre-shipment arrangements
3. Ensure accuracy - errors in commercial invoices can cause customs delays
4. Include all required fields - missing information leads to rejection
5. Keep copies of all invoices for your records

Conclusion

While both documents are important in international trade, understanding when to use each one is critical. Commercial invoices are mandatory for customs clearance and final transactions, while proforma invoices are excellent tools for quoting and pre-shipment preparation.

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