When it comes to importing and exporting, there are a lot of documents that you're going to have to deal with. Many of these documents have similar functions which cause confusion about their definitions. For example, many importers confuse the differences between a commercial invoice vs pro forma invoice.
The reason commercial invoices and pro formas get confused with each other is that they both give descriptions of the final amount for goods. The main difference between a commercial invoice vs pro forma is that pro formas give an estimate of goods while commercial invoices show the final amount that needs to be paid.
In our guide below, we discuss details about each document, the differences between the two and how important they are for importing. If you need more information about importing, consider getting an import compliance manual. You can find out more about how this manual will assist you in the importing process on our site.
The pro forma invoice is a preliminary document that is given before goods are purchased and imported. The document is excellent for budgeting since it will give you an idea of how much your business will have to pay when you buy the goods.
The pro forma invoice is submitted by the seller to a committed buyer before the goods they want are supplied. The information below is what should be on a pro forma invoice:
Pro formas are usually not required except for under specific circumstances. For instance, if you are importing goods that require an import license, you will be required to have one. Pro formas will also be necessary to open a letter of credit or if you want to transfer hard currency.
The pro forma invoice can have other important information that a buyer will need to import certain products.
Commercial invoices are a commonly used document in international trade. The commercial invoice tells the buyer how much that they will need to pay for the goods that they want to import. It is important to note that the commercial invoice does indicate the owner of the shipment.
The commercial invoice contains roughly the same type of information as the pro forma invoice. One thing that the commercial invoice has that is usually not included are the terms of sale which are also known as Incoterms ®.
In international trade, buyers and sellers create terms of sales for each other to abide by. Incoterms ® clarify what the terms of sale are by highlighting the responsibilities of the buyer and seller. This helps prevent confusion between parties in foreign trade.
Accurately filling out the commercial invoice is imperative to get your shipment on time. If the commercial invoice is not filled out properly, you might have to wait out a long shipping delay.
Putting inaccurate information could also result in paying the wrong duty rate. This means that you could be overpaying or underpaying the duty of your import.
Commercial invoices are always required for the international shipment of goods with commercial value. The exporter and importer both need to have the commercial invoice so that goods can be cleared by customs officials.
The customs officials in the buyer’s country also use the commercial invoice to determine and apply the correct duty rates for the imported goods. Thanks to the detailed information about the import that you list in the commercial invoice, customs officials can determine which duty will apply for each item you are importing.
The commercial and pro forma invoices are issued by the seller and not a government agency. Therefore, they have no standard format. However, the commercial invoice often looks exactly like the pro forma except for a few differences.
Both the pro froma invoice and commercial invoice come in different formats. Regardless of what invoice format is chosen, you can count on these documents being split into three sections.
The first part is dedicated to information about the transaction. The first set of fields that will need to appear are:
You should note that the fields invoice number, invoice date and order number will be absent from the pro forma. That is because the document is issued before an order is made.
The next section is where the contact information of both parties will disclose their contact information. The information that they will have to provide is:
The final section of the commercial invoice contains the shipping information of merchandise. This section includes:
These invoices are similar because they look roughly the same. That said, each of them has its own unique distinctions. The first is at what point each document is used.
The pro forma invoice is used prior to buying and importing goods. It simply lets a committed buyer know how much they will have to pay and provides them with details about what they want to buy. This makes the pro forma is good for budgeting since it estimates how much you will have to spend.
The commercial invoice is used at the end of the purchase and prior to your goods and services being imported. The commercial invoice is proof of purchase and is used by U.S. Customs officials to inspect your import.
The commercial invoice is helpful for accounting because it allows you to document your expenditure. It's always a good idea to keep the commercial invoice in case you have to participate in an audit.
Our table below will help you better identify some of the similarities and differences between these documents.
|Commercial Invoice||Pro Forma|
|Used for Accounting||✔️||✔️|
|Declaring Value of Goods||✔️||✔️|
|Used Prior to Shipment||✔️|
|Used After Shipment||✔️|
If you need further information about these two documents or any other importing documents, check out our beginner's guide to import and export documents.
Understanding the differences between commercial invoices vs pro forma as well as the other types of import documents can be difficult. That’s where USA Customs Clearance comes in. We have a team of experienced customs brokers that will help with anything you need.
With USA Customs Clearance, you can obtain a customs bond on our site with a few simple steps. If you're looking for some advice on how to handle your import then you can always navigate to our site where you can schedule a consulting session.
Our team is always on standby so contact them today and they get you on the right path to import.