A set of rules regulates international and global trade. World Trade Organization governs a system of regulations to supervise and improve international trade. Further, we’ll precisely explain what is a commercial invoice and its purpose. It is one of the crucial documents, which is mandatory in foreign trade exchange. The Kingdom of Saudi Arabia is a member of WTO since December 2005. And it is ranked 30 in total export and import in 2020. The national shipping company of Saudi Arabia is Bahri, the largest transportation operator in the country.
A few words about commercial invoicing
A commercial invoice is one of the mandatory customs documents. It’s necessary for the export and import clearance process. For the goods to pass the Riyadh customs clearance, a commercial invoice is required. The party that is selling and exporting goods needs to provide this document as proof of sale. The same applies to individuals and corporations exporting cargo across international borders. This customs document comes in a variety of formats, but it must provide certain info about shipment. There are available various templates of invoices on the internet. But each must contain fields with shipment info a shipper must fill in. It consists of at least 8 fields. This differs from country to country, and some fields are more important than others. You can even create your invoice template as an owner or partner of a business.
How to fill in a commercial invoice?
When it comes to filling an invoice, it has to be clear whose obligation is to fill it out. The party, that is exporting and shipping goods, has to provide it. The document has to contain all crucial information about the shipment. And the goods cannot pass customs clearance if the paperwork is incomplete. This also applies when shipping to Saudi Arabia. Required information about the goods crossing the borders is more or less the same for all countries.
- Sender details, company name, or the name of the sender.
- Address and phone number of the sender.
- Recipient name, address, and phone number.
- Recipient details.
- Shipping details, description of the shipment, quantity, and value.
- Additional comments about the shipment.
- Declaration statement.
- The total value of the shipment.
Shipment details field
When it comes to shipping details, your invoice should have additional information about the cargo. There must be noted a waybill number. It’s a tracking number of your shipment, that must be labeled on your shipment. Your shipment must have an ID number, as well. Also, the shipper must provide the invoice number and PO number. In addition to all this, the sender needs to state the reason for shipping. It could be a sale or gift, reclamation, etc. The shipping details field needs to provide info about the terms of the sale, too. That field also clarifies who bears the costs of shipping, taxes, insurance, etc. The process of customs clearance and freight forwarding cannot take place without all these data.
Description of the unit
This field consists of information about the subject of shipment. First of all, you need to specify the quantity of the items, and then the abbreviation of measure units. That indicates how many units the shipment consists of. This field gives you the chance to describe in detail the merchandise, what is it, what material, the purpose of the item, etc. To speed up the whole clearance process, you need to provide Harmonized tariff code. HS (harmonized system) code is a global system of classification which reduces delays and fees. It has a worldwide application to identify merchandise when assessing charges and taxes. This system helps custom authorities easily determine the taxes, charges, and tariffs for a certain product.
Country of origin is another piece of info you need to provide. Make sure you don’t misplace it with the country you are exporting from. Specific tariffs depend on the country of origin, so make sure you fill in this correctly. Except for all of this specify the value per unit and the total value of the shipment.
Other information that the law requires
This is the field where you suppose to indicate whether you filled Electronic Export Information (EEI). Or you could assign carriers to fill it for you. However, this applies only to shipments to China, Russia, and Venezuela. This is mandatory if any item overcomes the value$2500 or if items need an export license. Any other information that might be useful or required, can be specified in this field. Still, when shipping to Saudi Arabia inquire about Bahrain customs clearance if you have any doubts about necessary documents.
The total value of the shipment
Now is the time to point out the total value of the all items in the shipment. If there is some discount or price deduction be sure to mention it. And again, highlight the total value after the discount. This is also the field where you must state the freight and insurance details. It’s crucial to find out the cost of the transportation since some countries’ customs will charge you retail shipping rates. It can cost you a lot, plus that’s also taxable. Insurance is the amount that compensates the value if the cargo gets lost or damaged. The sender or receiver bears these costs, depending on the terms of their agreement. Besides these, this field contains the total weight, currency, and the total number of packages.
A declaration statement is a valid and legal certificate used in all international consignments. This way the exporter confirms that the info provided on the invoice is true and correct. Simply put, it should look like this: ” By this means, I confirm the verity of the information on this invoice. And that the substance and value of the shipment are accurate.” The text should not be longer than 550 words.
Is a commercial invoice valid and mandatory worldwide?
Yes, any exporter needs this document for international trade. Every shipment that crosses national borders must contain this invoice. However, it’s not necessary for shipments inside one country, from Florida to California, for example. Nor it applies to the trade of the countries of the European Union that have mutually agreed on the free exchange of goods and services. For all other shipments that cross the borders of countries or between continents, the invoice must be issued. A temperature controlled shipping companies are the right choice when shipping overseas and long distance. We have to emphasize one more thing. You don’t need it when shipping documents. This applies to all documents, regardless of the format or type.
Other types of invoices and differences between them
Invoices are documents that provide records about transactions between two parties. They notify the buyer about how much he has to pay. And they also help the one who sells goods to collect the specified amount. However, there are several types of invoices, which we use in different cases. A proforma invoice is a sort of estimate which informs the buyer of an approximate price of the product or service he is about to buy. Usually, this is not the final price so the value is not binding. A standard invoice consists of the basic details of the purchase and the parties involved. It must also contain details about the product/service itself such as description, price, and due date. Progress invoices are common in the construction industry. They show the progress of the project and exact debts at a given moment. There are also recurring and utility invoices, timesheets, etc.
Is a commercial invoice required for shipments to Saudi Arabia?
Yes, it is necessary for export and shipments to Saudi Arabia. In addition to this invoice, you must also attach other documents, too. No matter of value and method of transport, the exporter must issue a certificate of origin, the bill of lading, the insurance and carrier’s certificates, and a packing list. The customs officials are checking the authenticity of these documents. Each document must have at least one copy, with a barehanded signature of the person issuing it. For more info about the necessary shipment documents, you might want to browse Saudi Arabian import/export regulations. This is the best way to check if your shipment is subject to special rules and conditions.
What is e-invoicing?
Electronic invoicing (e-invoicing) is a transfer of the invoice between sender and buyer in electronic form. Its prime role is a payment request from a seller to a buyer. Besides that, it is a crucial accounting instrument when it comes to international trade. A business owner can choose between two options. The first is the point-to-point connection between seller and buyer. And the other is connecting multiple buyers and sellers through the network. E-format improves and accelerates the transactions between the parties. This method of e-invoicing also reduces paperwork and the probability of human error. This also simplifies the logistics aspect of the trade. And it saves time and money for logistic companies in Saudi Arabia and trade parties. When a seller posts an invoice, the data is stored in the system. Logistic companies use this data to connect buyers and sellers. And at the same time offer their services.
Logistic companies and their part in the process of export and shipping
Logistic companies are planning and executing the movement and storing of goods from the point of origin to the final consumers. All this is to meet the needs of customers in a profitable and time-saving manner. Perhaps the best example of such a company is FedEx. It’s a world-famous corporation, providing fast and reliable delivery of goods and services. FedEx operates in Saudi Arabia since 1994 through cooperation with local service providers such as SAB Express. However, there are other equally good logistics companies in Riyadh. The logistics industry in Saudi Arabia has become a very lucrative business $18 billion estimate. And it’s one of the most attractive emerging markets globally. According to Logistic Performance Index from 2018, Germany was leading, followed by Sweden, Belgium, Austria, Japan, etc. 8 of the top 10 were European countries. The last on the list was Syria. While Saudi Arabia occupied 55th place.
Benefits of the commercial invoicing
The importance and benefits are multiple, in favor of both buyers and sellers. First of all, it keeps customers satisfied giving them chance to pay after purchasing the products. Next, it serves as means of record-keeping and business monitoring. Also, it helps determine your inventory level at any given time. It’s a sort of proof, that a certain transaction actually took place. Being a legal document, it can be used as a valid document in a court of law, in case of a dispute. So, we could say it’s a kind of payment assurance. Since it provides detailed information about the shipment, it reduces the chances of mistakes. Accuracy saves time and money for the parties involved. All of the above significantly reduces the scope for fraud and abuse. If you’re looking for reliable and trustworthy partner logistics companies in Bahrain, you’ll be satisfied with the selection.
E-invoicing – the future of B2B payments
We have already explained what is a commercial invoice. Simply, it is a crucial customs document. But invoices evolve, too. Let’s clarify the importance of electronic invoicing. COVID-19 has helped to the transition from traditional to e-invoicing. The pandemic led the parties to accept digital payments and accept beneficial changes in the businesses. This is especially important for overseas and international shipments. Significantly shortens the customs clearance process itself. It also speeds up the transportation of goods and services. But the story does not end there, as there is still room for improving the system.