The value of the goods can either have an FOB element built in, or can show the ex-works value of the goods and have the FOB costs shown as a separate line item. It is also rather important that all the figures add up.īy convention, and because a huge number of Import Customs authorities world-wide have their systems set up to note this detail, an FOB value needs to be declared on the invoice. The currency used should also always be stated. It is always useful (and in some countries mandatory) to show unit prices and quantities on a pro-forma invoice. Which can sometimes be problematic when completing Documentary Credit documentation. If there is no heading, then the Issuing bank may be tempted to include the full description of all the goods. This encourages the use of this heading for the description of goods on a Documentary Credit. If a number of different items are being shipped, but they all come under a generic heading, then it is a good idea to head the description of the goods with the generic heading, usually in bold print. Most companies keep a record of their pro-forma invoice numbers with details of the customer, date and value.įull name and address of the importer and, if required, the full details of the delivery address, if this is different. The invoice should be entitled a Pro-Forma invoice and be given a unique number and dated. Consequently, the exporter may have to re-issue the pro-forma invoice. In many cases the importer may find out on application to their relevant government department that additional information is required. It is the joint responsibility of both the exporter and importer to ensure that this document is correct. As a guide only, it is recommended that the following information should be included on a pro-forma invoice, but please note that in some countries, local law practice will take precedent, so for certain countries additional and/or different information may be required. Information required in a Pro-Forma InvoiceĪ pro-forma invoice often requires much more information than either a commercial or customs invoice. Once the funds have been paid, then a commercial invoice needs to be issued to complete the accounting trail. It is a request for payment for a contract which may, or may not, be accepted. A pro-forma invoice gives all the details that would be found on a commercial invoice, but it is not part of the accounting procedure. With contracts where the payment is required before the goods and/or services are sent, then a pro-forma invoice is issued. Unless, of course, the local country laws require this to be the case. This is an invoice which can still be used by Customs in all countries to verify values, but is not included in the exporting organisations’ account procedures. In the circumstances detailed above, a Customs invoice may be issued. However, since all goods must have a value, an invoice is required for all international shipments. This can include warranty shipments, samples, or any shipment where the formal declaration of value is not included in the accounting practices. There are some circumstances, however, when a shipment is sent free of charge. A commercial invoice can also be issued to accompany goods in transit and is the document used by Customs in all countries to verify values and assist in the correct application of tax collection, such as Duty and Excise. The commercial invoice is also issued in accordance with local accounting laws and is the major instrument by which a company details their sales and purchases in their Accounts. For example, in the United Kingdom, if VAT (value added tax) is included, the VAT number of the organisation issuing the invoice must be detailed in full on the invoice. This is a document issued by one organisation and addressed to another, detailing out the goods and/or services provided, the quantities, costs and any other pertinent information required under the laws of the countries concerned. There are three main types of invoices that are used for courier services. Consequently, pro-forma invoices are sometimes issued in a format which can be counter intuitive to fulfilling their function. The problem seems to be that this aspect of pro-forma invoices is not well known. More often than not, the submission of a pro-forma invoice is the prelude to shaking hands on a successful international trade contract agreement and is often pivotal to the smooth running and completion of that contract. There are certain documents which play a vital, but often understated and misunderstood role in export contracts – one is the pro-forma invoice.
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