What is a Shipping Invoice? Definition, Purpose & Free Tools Included

International trading is a gateway to global opportunities, fueling economic growth and expanding market horizons. However, amidst the promise of prosperity, navigating the tedious yet crucial paperwork is necessary to ensure seamless transactions. 

At the forefront of this administrative landscape stands the shipping invoice—a document as essential as it is intricate. From confirming orders to facilitating payments and navigating customs regulations, the shipping invoice serves as a vital link in the chain of international commerce. 

In this guide, we will further discuss the surroundings of shipping invoices, shedding light on their definition, purpose, shipping components, and the free resources we suggest.

Quick Guide to Shipping Invoices

A shipping invoice is a document used in international trade to detail goods shipped, costs, and the agreed terms between the seller and buyer. Apart from serving as an authorized billing document, it also works as a verified record for customs.

These shipping invoices showcase the shipment’s contents, origin, destination, and declared value. They are essential for accurate import and export processes, ensuring taxes, tariffs, and fees are calculated correctly.

Understanding Bills of Lading

A shipping invoice, also popularly termed as a bill of lading (BOL) is a legal document supporting international trade. It contains details of a freight shipment. A shipping invoice or bill of lading acts as an acknowledgment of a receipt of the goods. It’s like a detailed shopping list that tells everyone involved what’s being shipped, where it’s going, and how much it costs.  

The shipping invoice has the following inclusions within the document:

• Type of goods being transported by trucking companies, 
• product name, 
• their quantity (volume), 
• rate per quantity,
• total costs involved, and the business terms. 

The destination of the goods is also included in the bill of lading. It also serves as a legal agreement between the freight carrier and the shipper. Notably, the bill of lading is different than the Waybill, although some consider the two very similar.

Essential Components of a Shipping Invoice

As a vital instrument in the transportation of goods across borders, the bill of lading must accurately reflect the details of the shipment. To facilitate a seamless shipping process, make sure your bill of lading includes the following 10 crucial elements.

1. Contact information of the shipper

The first thing to appear in the bill of lading is the shipper’s information; it included the invoice number, full company name, logo, business address, and phone number or fax number.

2. Receiver’s contact information

After including the shipper’s information in the invoice, also add that of the receiver. It must include every detail of the receiver with the full company name or contact person information, logo, business address, and phone number or fax number. When creating an invoice, it is important to ensure your invoicing software supports international addresses. Many are made specifically for a jurisdiction.

3. Reference number or purchase order number

The purchase order number and other useful figures for referencing the bill of lading must be added to validate the document and to keep a record. The freight shipment may also require these numbers before releasing the items.

4. Additional instructions or notes

A section on the bill of lading allows the inclusion of special notes to the carrier about the shipment taking place.

5. Pick-up date

The date of pick up should be noted on the bill of lading to affirm when the shipment was received by the carrier. This data is used for tracking a shipment and is needed during invoice reconciliation.

6. Description of goods

The goods in the shipment have to be described as they are on the bill of lading or as discussed during product requirements. The description for billing purposes includes the quantity of the items, weight, value, and measurement if applicable.

7. Type of packaging

A bill of lading must list the type of materials used in packaging the shipment, maybe cartons, pallets,  crates, or drums.

8. Freight class

It is important to tick what class of freight your shipment is, classes of freight are up to 18. For proper identification based on factors like value and dimension, state the class of freight on the bill of lading.

9. Special designations

Sometimes, the goods that are being shipped may need extra care or have to be handled with ease. Whatever the case is, you must state any special designation. For example, the shipment may be hazardous if brought near some substance.  State what has to be done to avoid danger.

10. Authorized signature

The bill of lading once signed by an authorized representative of the shipping company, serves as a confirming acceptance of the goods for shipment. The signature indicates that the terms and conditions outlined in the bill of lading have been acknowledged and signify agreement to the terms of carriage.

Purpose and Benefits

Bill of lading or shipping invoices are generally issued for the following purpose or objectives:

1. As evidence of the contract of carriage: 

A bill of lading serves as evidence of the contract between the shipper (seller/exporter) and the carrier (shipping company) for the transportation of goods. It outlines the terms and conditions of the shipment, such as the parties involved, the goods being transported, and the destination.

2. For receipt of goods: 

When the carrier receives the goods from the shipper, the bill of lading acts as an acknowledgment. It represents that the carrier has taken possession of the goods in the described condition and quantity. This helps ensure clarity and reduces the chances of disputes.

3. Acknowledged as a document of title: 

A bill of lading is a transferable document to a third party. It can be anyone such as a bank or the consignee (buyer/importer), giving them the right to receive the goods. The party in possession of the bill of lading is entitled to claim the goods from the carrier at the destination. This contract specifies the terms and conditions of the shipment, including the responsibilities of each party.

4. Can be used as instructions for delivery: 

The bill of lading provides clear instructions for the carrier on where and to whom the goods should be delivered. It specifies the consignee and the destination port or location. 

5. For facilitating trade finance: 

In international trade, the bill of lading is often used as collateral for trade financing, such as letters of credit. Banks may require the presentation of the bill of lading before releasing payment to the seller/exporter.

6. For customs clearance: 

The bill of lading is an essential document for customs clearance at the destination port or country. Customs authorities may require the original bill of lading to verify the shipment details and assess any applicable duties or taxes.

Types of Shipping Invoices

There are several types of shipping invoices used in international trade, depending on the mode of transportation and the specific requirements of the parties involved. Here are some common types of shipping invoices:

1. Commercial invoice:

• These invoices are one of the most familiar and widely used invoices for any mode of transportation (sea, air, or land).
• It provides detailed information about the goods being shipped, including their description, quantity, value, and other relevant details.
• It serves as a key document for customs clearance and is used to calculate applicable duties and taxes.
• Learn more about the commercial invoice.

2. Proforma invoice:

• A proforma invoice is issued before the actual shipment takes place and serves as a preliminary invoice or quotation.
• It provides an estimate of the goods’ value, shipping costs, and other charges, allowing the buyer to secure funds or obtain necessary documentation.
• Proforma invoices are often used in international trade to facilitate the opening of letters of credit or obtain import licenses.
• Learn the difference between a commercial invoice and a proforma invoice.

3. Consular invoice:

• A consular invoice is a specific type of invoice required by some countries for customs clearance purposes.
• It must be certified or legalized by the consulate or embassy of the destination country before the goods can be exported.
• Consular invoices typically provide more detailed information about the shipment, such as the country of origin, HS codes, and the signatures of authorized parties.

4. Customs invoice:

• Some countries may require a separate customs invoice in addition to the commercial invoice.
• A customs invoice is specifically designed to meet the requirements of the destination country’s customs authorities and may include additional information or formats.
• It is often used for statistical purposes and to facilitate the calculation of applicable duties and taxes.

5. Packing list:

• While not a true invoice, a packing list is a document that accompanies the shipment and provides a detailed list of the contents of each package or container.
• It includes information such as the quantity, weight, and dimensions of the items being shipped.
• Packing lists are used by customs officials and carriers to verify the contents of the shipment and ensure accurate handling and delivery.

These are just a few examples of the various types of shipping invoices used in international trade. The specific type of invoice required may vary depending on the destination country, mode of transportation, and the nature of the goods being shipped. It is essential to consult with shipping experts or local customs authorities to ensure compliance with the appropriate documentation requirements.

Digital Tools and Templates

As we know creating a shipping invoice is a crucial step in the international trade process. Accurate and complete shipping invoices are essential for customs clearance, payment processing, and ensuring compliance with trade regulations.

Hence, to streamline the process of creating shipping invoices, many businesses and logistics providers utilize readymade and easily downloadable free invoicing templates. These templates are pre-formatted documents that include all the necessary fields and sections required for a shipping invoice.

Here are several perks to utilize the free shipping invoice template. Have a look:

• Time-savvy: Templates eliminate the need to design and format invoices from scratch, allowing for quicker invoice creation.
• Consistency: Templates ensure a standardized layout and format, promoting consistency in your shipping document.
• Completeness: Well-designed templates prompt you to include all the required information, reducing the risk of missing crucial details.
• Professionalism: Templates often feature professional designs, enhancing the overall appearance and credibility of your shipping invoices.
• Customization: Many templates allow for customization, enabling you to incorporate your company’s branding or specific requirements.
• Prompt payments: The professional and clear-looking invoices ensure smooth customs clearance and quick payment processing.
• Error reduction: By providing pre-populated fields and guidelines, templates minimize the chances of making errors or omissions.

Shipping Invoice Vs Commercial Invoice

A shipping invoice template describes the items shipped from a company to the purchaser along with the service charges and the list of items being shipped. Shipping invoices are sometimes also known as trucking invoices or freight invoices. But, a business owner or a company prefers to call it a shipping invoice to avoid any kind of confusion among the customers.

The commercial invoice is a legal record between a supplier and a company or third-party buyers. To invoice a commercial document you need to clearly describe the sold products and the amount due to the customers. The commercial invoice is one of the core documents that is used by customs officials in determining customs duties.

The Final Words

After delving into this comprehensive guide on shipping invoices, we’ve navigated you through the intricate world of international trade documentation, shedding light on the pivotal role that shipping invoices play in facilitating seamless transactions.

Lastly, we suggest you apply the knowledge gained here to optimize your invoicing processes, enhance your business practices, and unlock the full potential of your global trade.