What is a commercial invoice, and how to create it?

In 2023, the Philippines imported $159.29 billion worth of products, underscoring the scale and complexity of international trade. Managing such large volumes of goods requires precise documentation, which is where a commercial invoice comes in. 

This legal document is both a record of the transaction and a customs declaration for shipments crossing borders. It details the items being shipped and outlines the terms of sale between the exporter and importer, including prices, quantities, and payment conditions. 

Additionally, customs authorities rely on the invoice to calculate taxes, duties, and tariffs, making its accuracy essential for smooth international shipping and regulatory compliance.

Steps to create a commercial invoice

To ensure your commercial invoice is accurate, complete, and compliant with international trade regulations, follow these essential steps when creating one.

1. Add shipper, receiver, and bank details

The first step in creating a commercial invoice is to clearly list the full details, including:

• Shipper (Exporter) Details: Include the full legal business name, physical address, phone number, and email. Exporters should also provide their Taxpayer Identification Number (TIN) or equivalent registration number to verify legitimacy with customs authorities.
• Receiver (Importer) Details: List the importer’s business name, address, phone, and email. Depending on the destination country, include the importer’s Tax ID or VAT number to ensure correct tax and duty assessment.
• Bank Information: When international payments are involved, provide complete bank details, including account number, bank name, branch, and SWIFT/BIC code. This ensures smooth financial transactions linked to the shipment.

By including this information accurately from the outset, you can streamline customs clearance, prevent shipment delays, and ensure compliance with international trade regulations.

2. Provide a clear description of the goods

A clear, detailed description of your goods on a commercial invoice is one of the most important elements for successful customs clearance and duty assessment. Customs officials rely on this information to identify each item, assign the correct tariff classification, and determine applicable taxes and duties in the Philippines. 

Therefore, list the specific product name, quantity, material or composition, and the intended use of the goods instead of generic terms. Avoid using vague descriptions such as “samples” or “electronics,” which may trigger additional scrutiny and slow down the customs process. 

3. Include the correct HS code

The next step is to include the correct Harmonized System (HS) code for each product for customs clearance and duty calculation. 

HS codes are a globally standardized numeric system used to classify traded goods, with the first six digits consistent across over 200 countries, and additional digits added for regional specifics, such as the ASEAN Harmonized Tariff Nomenclature (AHTN) used in the Philippines.

Customs authorities rely on these codes to determine the appropriate duty and tax rates on imported goods.

4. State the country of origin

When preparing a commercial invoice, you must clearly state the country of origin for each product, which refers to the country where the goods were manufactured, produced, or substantially transformed. This matters because customs authorities use the country of origin to determine the applicable duty rates and whether the shipment qualifies for preferential tariff treatment under trade agreements. 

For example, products that meet the origin rules of ASEAN‑related agreements may be eligible for lower duties upon import into the Philippines and other ASEAN member countries.

In addition, if components of a product come from different countries, you should list the finished product's origin based on where the most substantial transformation occurred. 

5. Declare the invoice total and shipment value

When creating your commercial invoice, it’s essential to clearly state the total invoice amount and the overall shipment value. The declared value should reflect the actual price paid or payable for the goods, as this figure is used by customs authorities in the Philippines and other countries to calculate duties and taxes.

In addition, if freight, insurance, or other charges are included in the sale price, these should also be added to the total shipment value where applicable. Providing an accurate and complete valuation ensures compliance with customs regulations, reduces the risk of penalties or delays, and helps prevent disputes with authorities during the clearance process.

6. Specify the type and reason for export

After declaring the shipment value, specify the type and reason for export on your commercial invoice.

The export type indicates whether the goods are being shipped on a permanent basis (for sale or distribution), a temporary basis (intended to be returned after use, such as for a trade show), or for repair and return (sent abroad for servicing and then returned to the sender).

In addition to the export type, clearly stating the purpose of the shipment, such as sale, gift, sample, replacement, or repair, helps customs authorities understand why the goods are leaving the country.

Providing this information enables customs officials in the Philippines and other countries to classify the shipment correctly, apply the appropriate regulations, and determine any applicable duty exemptions, thereby minimizing delays and ensuring smoother port clearance.

7. Add the applicable incoterms

Including the correct International Commercial Terms (Incoterms) on your commercial invoice clarifies the division of costs, risks, and responsibilities between you and your trading partner. 

Incoterms are standardized three‑letter trade terms created by the International Chamber of Commerce (ICC) to guide international sales contracts and logistics arrangements.

For example, EXW (Ex Works) places most obligations on the buyer, DAP (Delivered at Place) requires the seller to carry the goods to the agreed destination, and DDP (Delivered Duty Paid) makes the seller responsible for delivery, duties, and taxes up to the buyer’s location.

By stating the correct Incoterm, you prevent confusion over who pays for freight, insurance, and customs duties, and you help customs authorities in the Philippines and elsewhere understand the agreed terms of delivery.

8. Include additional shipment details

In addition to core invoice information, adding comprehensive shipment details to your commercial invoice helps both carriers and customs authorities process your goods efficiently. 

Be sure to include the Air Waybill (AWB) number, a unique tracking identifier assigned to your air cargo shipment that enables real‑time tracking and helps customs link your waybill to your invoice and other documents.

Also, list the unit net weight of each item and the total shipment weight (including packaging) on your commercial invoice. This information is essential because customs officials, including those in the Philippines, verify weight against declarations to assess duties correctly and guard against discrepancies that can trigger delay or additional inspection.

Common commercial invoice mistakes to avoid

To avoid customs delays, added costs, or fines when shipping internationally, make sure to steer clear of common mistakes when creating a commercial invoice:

• Incomplete or incorrect information: Missing essential details such as buyer/seller contacts, invoice numbers, or shipment values can trigger holds and questions from customs, prolonging clearance.
• Wrong HS codes: Using an incorrect HS code leads to misclassification of goods, resulting in incorrect duty calculations, inspections, and potential fines.
• Vague product descriptions: Generic terms like “electronics” or “goods” prevent customs from properly identifying the products, often resulting in additional scrutiny and clearance delays.
• Undervaluing goods: Deliberately lowering the declared value to reduce duties is illegal in many countries and can lead to penalties, seizures, and compliance issues.

Tips for creating a compliant commercial invoice

Creating a commercial invoice that meets international standards can prevent delays, fines, and compliance issues.

• Use standardized templates: Employ consistent, professional invoice formats to reduce errors and ensure all necessary fields are included.
• Double-check all details: Verify product descriptions, quantities, HS codes, values, and shipment information before submission.
• Consult experts when needed: For complex shipments, seek guidance from customs brokers or logistics professionals to ensure compliance.
• Keep records for compliance: Maintain copies of all invoices for audits, regulatory checks, and future reference.

Simplify commercial invoicing with DHL Express

In international shipping, creating an accurate commercial invoice ensures your goods move smoothly across borders. Thus, accuracy, compliance, and proper documentation are essential to prevent delays, fines, or misclassification at customs. 

By relying on a trusted partner like DHL Express, businesses can streamline customs clearance, safeguard shipments, and enjoy reliable global delivery. With our expertise in international logistics and customs processes, we help companies navigate complex regulations with confidence. 

For businesses ready to simplify and accelerate their international trade, open a DHL Express business account today and experience seamless global shipping.