Invoice: what is it and what role does it play in logistics

An invoice is a document that confirms a commercial transaction for the sale of goods or services. It contains important information about the transaction, including the details of the parties involved and a qualitative and quantitative list of goods and services. Usually, this document must be provided by the seller to the buyer. This form must accompany the cargo when crossing the border.
The confirmation document is necessary for customs clearance of goods. Such brokerage services are provided by the logistics company TVL. Based on the commercial invoice, the amount of customs duty and VAT is determined, and the transaction is officially confirmed. All imported goods must be accompanied by documentation that meets the requirements of international law. The absence of the relevant documents leads to fines and delays in the delivery of goods. In cases of possible legal claims from counterparties or customs authorities, the invoice will serve as evidence. In business, this document is necessary for accounting and reporting.

What is an invoice and why is it needed in logistics?

An invoice is a type of commercial document with detailed information about the subject of the transaction. It specifies the name, quantity, price, and total cost of the goods. As a rule, a pro forma invoice is issued by the seller to the buyer for the following purposes:

• confirmation of the legality of the transaction;
• payment;
• calculation of taxes and fees;
• as a primary document for accounting.

Simply put, an invoice is, in simple terms, confirmation of a transaction for the purpose of creating a customs declaration. The document has full legal force after payment. Let’s take a closer look at how invoices work in Ukraine.

Proof of transaction

A paper or electronic document is a legally valid argument for conducting a transaction. The buyer received the goods or services according to the parameters specified in the document. The amount specified in the commercial invoice was transferred to the seller’s account details. Thus, all agreements between the parties are recorded and confirmed by the invoice.

Reason for payment

Financial calculations are made on the basis of the commercial document. Complete information is indicated: the total cost of the entire shipment/goods/services. It is the official pro forma invoice that is a legal request for payment transfer.

Accounting

The document is classified as primary in terms of recording transactions in accounting. It is used to calculate taxes and customs duties, confirm income, and can be provided to regulatory authorities upon request.

Customs clearance procedure

In international trade, the customs invoice has become the legal basis for completing the declaration. Subsequently, value added tax and all customs duties are calculated. The presence of this document helps to avoid fines and delays of goods at the border.

Control of currency transactions

Banks are required to verify the compliance of all currency transactions of residents and their commercial activities. This system of measures is aimed at controlling the movement of currency in bank accounts. Therefore, customers are required to provide relevant information. An invoice is required by the bank for currency control purposes.

Types of documents

There are two types of documents. These are commercial invoices, which are the final form for customs declarations and payments. Pro forma invoices are preliminary versions of documents that are created as a basis for partial financial settlements (prepayments). They directly record the agreement. This version can be changed and supplemented at a later date.
Businesses that frequently conduct trade operations and transactions with foreign agents are constantly faced with the need to create commercial documentation. Therefore, they must know exactly what an invoice looks like. Different types of invoices are used in international law, but in Ukraine, the two mentioned above are used as the main ones. Therefore, it makes sense to consider them in more detail.

Commercial invoice

When transporting goods/cargo across state borders, it is necessary to comply with their legislation. This includes customs control and payment of fees, checking cargo for compliance with the documentation, and so on. To go through the procedures, a customs declaration must be created, and the basis for its registration is a commercial invoice.
Errors in the preparation of the document will result in cargo delays at the border and fines. Therefore, it is necessary to know exactly how to prepare an invoice. It should be noted that after the Commercial Invoice is sent, no changes can be made to the form. This would be a violation, resulting in delays in customs clearance.

Proforma invoice

This version specifies the obligations of the seller or service provider and the preliminary price. The pro forma invoice is subject to further changes, and its purpose is to record the fact of the transaction. The invoice includes a preliminary list of goods and their prices, as well as the agreed prepayment amount. This form of document is often used when transferring humanitarian aid or other free shipments.

What does an invoice look like and what information should it contain?

The law does not provide a single form for filling out a commercial invoice. However, the documentation must contain accurate information. What does a paper or electronic invoice sample look like and what must be indicated:

• date of issue;
• full name and details of the seller;
• information and details of the buyer;
• list of goods;
• price of each type of goods;
• total cost of the consignment;
• currency for payment;
• calculation of tax rates and amounts.

Additionally, the form may contain information about the foreign economic transaction that formed the basis for the delivery of goods. It can also include various details about the cargo: place of loading/unloading, terms of payment and delivery. Information about discounts, if any, is also added.

Examples and templates

There is no single template for the document, and the law does not require one. A standard invoice is created as follows:

• enter the name (invoice or commercial invoice);
• put the date and assign a unique number;
• provide information about the seller (company/enterprise name, legal address, details, contact information);
• describe the goods/services in detail (quantity, price);
• calculate the total cost;
• enter the terms and methods of payment.

You can find a pro forma invoice template on accounting service resources and platforms that specialize in preparing various documents. Or you can delegate the preparation to a reliable logistics operator that provides cargo escort and customs clearance services.

How to create and correctly fill out an invoice

Creating an invoice is quite simple if you have even a little experience in document management. The main thing is to provide accurate information about the goods and the seller. How to create and fill out the document step by step:

1. Document name: pro forma invoice or commercial invoice.
2. Assign a unique number to the document to simplify identification.
3. Date the invoice with the date it was issued.
4. Indicate the place of issue.
5. Enter the seller’s full details: name, legal address, tax number, and bank details.
6. Add information about the buyer: name/full name, address, identification number.
7. Description of each item: unit of measurement, quantity, price, total cost.
8. Calculating the total cost and taxes.
9. Specifying the terms of delivery and payment.
10. Signature and details of the authorized person.

The invoice is drawn up in English and Ukrainian. Companies that are actively engaged in commercial activities can create their own form to fill out and use it as a template.

Invoice for customs

Customs authorities and the tax service control revenues and fees. Therefore, they have the right to verify the accuracy of the customs value of imported goods. The authorities check that the documentation has been completed correctly. According to the law, the declarant is obliged to submit reliable information in documentary form to the relevant state services.
The Customs Code of Ukraine specifies the mandatory set of documents for confirming the customs value of goods. The list also includes an invoice.

Commercial invoice and invoice: what is the difference?

The term “commercial invoice” is used in the international sphere, while “invoice” is used in domestic financial transactions. However, the essence of the terms remains the same. Simply put, commercial invoices are used in foreign economic activity, while invoices are used for internal accounting. The documents contain important financial information and are part of business document flow. Their names mean the same thing, just in different languages.
The main commercial invoice and the preliminary pro forma invoice have the same legal force. The forms have become the main documentation for accompanying goods when crossing the border.

Conclusions

The import of goods or the provision of services is impossible without a correctly completed invoice. This legal argument guarantees the transparency of relations between both parties to a commercial transaction. The document is the basis for financial accounting. It contains all the information about the income and expenses of the business. A commercial invoice facilitates international settlements.
TVL specializes in creating sample or customized invoice templates for businesses. Professionals will advise you on customs clearance and filling out the document. Everything will be done in accordance with the requirements of the law. Support and advice from specialists will guarantee fast customs clearance and inspection.