Imagine running a successful shipping company where everything seems to run smoothly. One day, you come into work to find a customer complaint because their invoice didn't accurately reflect their order.
This complaint came from a major customer, and your company won't survive without their business. You do your best to make it right, but you need to avoid this situation in the future.
How can you do that? Keep reading to learn the difference between an invoice and a commercial invoice.
When You Send It
One factor that can determine the type you use is when you want to send it. For example, you send a commercial invoice after completing the work or shipping an order.
On the other hand, there are some types of invoices that you send before. If you want to give an estimate or have supply chain issues, sending an invoice with an estimate is a good option.
Another time you may send one early is for installment payments. When you offer a payment plan to someone with low credit risk, you can send an invoice each time the customer has a payment due.
The Number of Items
If you send one before shipping an order, you may have accurate information on it. However, things can change, and issues with any part of the supply chain may require an update.
When you need to change the quantity and overall order amount, you need to send a commercial invoice or some other type. That way, you can correct the error and ensure you receive the correct payment amount.
Even if you don't make any changes to the amount, it can help to send a commercial invoice to act as a secondary packing list. Your customer will then know if something is missing, and you can fix any problems that arise.
What Else Goes on It
As a freight broker, you should also consider what goes on the type of invoice you use. For example, a commercial invoice includes:
- Number of items
- Volume and/weight of the items
- Item descriptions
- Packaging format
- Overall value
Other types may contain different information. A company that provides a service may include the dates of the service and the total amount of hours the service took.
Knowing what type of you need to create will help you determine what to include. Then, you can make sure your customer understands what they're receiving and what they owe to you.
Where It Goes
Another way a commercial one differs from other types is that it's usually for international shipping. Using a commercial one for international orders can help the package go through customs more easily.
It can also help you collect your freight payment without having to be in the same country. Whether you're shipping a package to a bordering country or a different continent, use a commercial invoice.
That will make it easier for everyone who handles the package. And you won't have to worry about the package getting stuck at customs because it doesn't contain a list of the contents.
Perhaps you determine a commercial one isn't the best option for a particular order. You should know how other types work and when to use them so that you can ship orders and collect payment.
Different invoices contain various pieces of information, and some are better in certain situations. Consider a few popular types of invoices and how you can use them.
A standard invoice is common among businesses that offer services to clients. The invoice will contain the names and contact information of both the business and the client.
It will also typically have an invoice number to help both parties keep track of invoice payment. The invoice may outline everything the business did in that billing cycle and include a total amount due at the bottom.
You can also use a standard invoice when shipping products directly to customers. Even if they pay online ahead of time, the invoice can show proof of payment and act as a packing list.
Credit and Debit Invoices
Maybe you decide to use a commercial one to collect a major freight payment or when working as a freight broker. But somewhere along the line, you need to change the amount due.
If you need to offer a discount or remove something from the original invoice, you can use a credit invoice. A debit invoice is another option, and you'll use it when you need to increase the charges because of adding something to the package.
Another option is to combine the two, such as to add another item but also give a discount. You'll use a mixed invoice to do that.
If you aren't sure if you'll have a full shipment or you have other shipping issues, use a pro forma invoice. This is a specific type of invoice that lets you estimate what you will send.
While it's more common for services businesses to use when giving quotes, a freight broker can use it as well. Then, you can adjust the invoice if you can't ship the full order when you planned to.
Whether you've been having trouble getting products in or have full truckloads, a pro forma invoice is great. It can give customers an idea of how much they'll owe, and you can make changes if necessary.
The last popular type is a final invoice, and it's what it sounds like. You will send a final invoice after completing a service or shipping a product order.
It goes into more detail about the order, such as the product size, color, and type. It will show the amount due, and it may reflect any pre-payments the customer made.
A final one doesn't usually change because you only create and send it after completing every other step of the process.
Should You Use an Invoice or Commercial Invoice?
When shipping an order or offering a service, you need to use the right type of invoice. A commercial one is a popular option for international shipping because it contains information to assist with customs.
But other invoices are useful for domestic and international orders. Consider what information you want to include and if you'll need to edit it later.
Do you need help with your logistics business? Sign up for an account today.