Exporters of project materials are required to deliver, along with the goods, a predefined set of shipping documents to the importer. Such documents are used to clear the goods at import, to document the delivered products for end-users’ records and for administrative purposes (example authorize and pay invoices). Shipping documents shall be precise and accurate. Even little discrepancies or omissions might prevent the goods from being exported or imported and can generate liabilities for the seller (missed payments, warehousing costs, penalties etc). Further, in case of sale with a letter of credit, imprecise documents generate extra costs or payment delays and risks (as the expiry of the credit).
PROFORMA INVOICE (“PI”)
The proforma invoice (“PI”) is an administrative document, sent by the exporter to the importer prior to the shipment of goods, that states the type and the quantities of the merchandise to be sent, their value, and other commercial and technical data about an upcoming delivery. Proforma invoices are issued when the seller requests a payment from the buyer before the commencement of the delivery operations.
COMMERCIAL INVOICE (“CI”)
Commercial invoices list the type of goods delivered by an exporter to an importer, their quality and quantity, their unit and total prices, the name and the address of the seller, the name and the address of the buyer (sold to/ship to/bill to parties), the delivery location (complete with the applicable Incoterm) and, the payment terms (invoice due date). A commercial invoice proves that a sale has happened (for the seller) and that a purchase has been made (for the seller), determines the taxable amount for customs, and creates an account receivable and an account payable in the seller and buyer’s accounting systems respectively. In some cases, the commercial invoice has to be attested by the local chamber of commerce (attested invoice) before being sent to the importer (which means that the invoice has to be legalized by the Chamber of Commerce of the exporter to be considered valid by the buyer). Attested invoices are common practice for exports to Arab countries.
Additional information about the difference between proforma and commercial invoices are provided in this article.
Some countries require that sellers invoice local buyers on predefined forms (consular invoices), and do not allow invoicing with free formats. Consular invoices are used by countries interested in controlling the quantity and quality of imported goods for multiple reasons (antidumping, taxation, import control, statistics). To issue a consular invoice, the seller requests the form from the Consulate of the importing country, fills it and submits it along with a standard invoice.
PACKING LIST (“PL”)
The packing list shows the shipping details of an order: the quantity (net and gross weight, plus volume) and the quality of the shipped goods, the date of the shipment and other logistics details such as the routing and the forwarder. A packing list may also indicate the types of packages used for the shipment, such as cases, boxes, crates, drums, cartons, pallets, containers and so on. Packing lists do not generally show pricing information, which is shown, instead, on the commercial invoice.
The packing list is generally physically attached to the packages to facilitate the customs operations in the exporting and importing countries and to allow the reconciliation of the incoming goods with purchase orders at their arrival at the buyer’s premises.
BILL OF LADING (“BL”)
The bill of lading (“B/L”) is a contractual document between the owner of the goods (exporter/seller) and the carrier in charge of the delivery of the goods (the ship operator). The bill of lading represents a title on the goods and can be either negotiable or non-negotiable (the latter are called “straight B/L”). A negotiable bill of lading can be used to transfer the ownership of goods in transit and is a standard requirement for transactions covered by letters of credit. The party in possession of an original bill of lading can withdraw the goods upon arrival at the port of destination.
AIRWAY BILL OF LADING (“AWB”)
AWBs are non-negotiable documents issued by the air carrier to the owner to define the nature of the contract and confirm the execution of an air transport.
HOUSE BILL OF LADING (“HBL”)
This is a special bill of lading issued by a forwarder and is generally not negotiable (as it doesn’t represent title for the goods). Exporters should verify if a house bill of lading, instead of a carrier’s issued bill of lading, is accepted by the importer’s bank in case the transaction is covered by a letter of credit (some banks may not accept it due to its non-negotiable nature).
CMRs is a common document when goods are transported by truck from a seller to a buyer. The CMR is filled by the seller or the carrier, but carrier shall sign it upon collection of the goods.
This document has the following objectives:
- it states the responsibilities and the liabilities of the parties (shipper and carrier)
- it represents that goods have been handed over from the shipper to the carrier and that carrier has taken possession of the goods
- when countersigned by the consignee, it proves that goods have been delivered and received and that carrier has executed the consignment
CMR is not negotiable, does not represent the title of the goods but is frequently used, even in case of documentary credits.
Some buyers request a certificate of inspection to make sure that the imported goods comply to specific manufacturing standards/norms and to ascertain that the quantity and the quality of the shipped goods correspond to the quantity and the quality of the ordered goods. Inspections can be executed during the manufacturing operations, at the departure port or at the arrival port by independent organizations which are neutral both to the buyer and the supplier (example SGS, DNV, Lloyd’s etc.). The cost for such inspections is generally borne by the buyer unless otherwise agreed in the sale contract.
CERTIFICATE OF ANALYSIS
For some commodities, such as chemical products and raw materials, exporters provide also chemical certificates to prove that the goods meet composition, acidity, viscosity, moisture targets and comply to applicable norms and regulations (such as Reach or Rohs). Such analysis is executed, generally, by an independent laboratory appointed by the parties (before or after departure). In some cases, the importer accepts certificates issued by the manufacturer.
GOODS INSURANCE CERTIFICATE (CARGO INSURANCE)
Insurance certificates are negotiable documents issued by insurance companies that protect the goods from predefined accidental events (or other events detailed in the policy) against a fee. An insurance certificate is mandatory for specific delivery terms, as CIF. Insurance policies can be purchased both by the buyer or the seller, depending on who has the contractual responsibility for the shipping risks (which is defined by the applicable Incoterm).
To file a claim against a negative event covered by insurance, the original certificate has to be submitted with copies of ancillary documents, such as, but not limited to, the invoice, the packing list, the bill of lading and a case report (usually drafted by the insurance agent in cooperation with the parties involved, shipper and carrier).
CERTIFICATE OF ORIGIN (“COO”)
Some importers require the seller to produce a specific document (called “certificate of origin”), that attests the actual origin of the goods. Such certificate is issued by the Chamber of Commerce of the exporter, based upon its written request and availability of documents that prove the actual origin of the merchandise (requirements may differ for manufacturers and resellers). When the exporter fails to deliver a valid certificate of origin, the customs in the importing country may reject the clearance of the goods.
RESTRICTED DESTINATION STATEMENT
The restricted destination statement is a provision set by the exporter of the goods, shown on the export documents (such as proforma and commercial invoices), to inform the importer, the shipping agent and other involved parties (example customs) that the goods have a specific destination and not others. This type of restriction is used to comply with export control regulations, that prohibit exporter of dual-use and sensitive goods to ship merchandise to specific countries (example Iran, North Korea etc.).