What is a commercial invoice? Definition and FAQs

Published Monday 22 June 2026

Table of contents

• What is a commercial invoice?
• What to include on a commercial invoice
• How to create a commercial invoice (5 steps)
• Common commercial invoice mistakes
• Commercial invoice vs other documents
• Manage international invoices with Xero
• FAQs on commercial invoices

Key takeaways

• A commercial invoice is a legal document required for every international shipment, used by customs authorities such as HMRC to calculate duties, taxes and tariffs.
• Your commercial invoice should include business details, product descriptions with Harmonised System (HS) codes, financial information, shipping terms and country of origin.
• Errors on commercial invoices are common, so reviewing your invoice carefully before shipping can save you from costly delays and penalties.
• Commercial invoices differ from regular invoices, proforma invoices, CN22/CN23 forms and packing lists, and using the wrong document can hold up your goods at the border.

What is a commercial invoice?

A commercial invoice is a legal document that declares the contents, value and terms of sale for goods shipped internationally. It acts as proof of the transaction between buyer and seller, and customs authorities use it to assess import duties, taxes and tariffs.

For UK businesses exporting goods, a correctly completed commercial invoice is essential for smooth customs clearance. Without one, your shipment could face delays, additional inspections or even rejection at the border.

When do you need a commercial invoice?

You'll need a commercial invoice whenever you ship goods across international borders for the purpose of sale. This applies whether you're sending products to customers in the European Union (EU), the United States or anywhere else in the world.

Since the UK left the EU, commercial invoices are now required for goods moving between Great Britain and EU member states. You'll also need one when shipping to non-EU countries. The main triggers include:

• Selling physical goods to an overseas buyer
• Sending commercial samples valued above customs thresholds
• Exporting goods that require customs declarations
• Shipping items where the carrier or freight forwarder requests one for clearance

If you're sending low-value non-commercial items, such as personal gifts, a simpler customs declaration form like a CN22 may be sufficient. For commercial shipments, always use a full commercial invoice.

Why customs authorities need commercial invoices

Customs authorities, including HM Revenue and Customs (HMRC) and UK Border Force, rely on commercial invoices to process goods entering or leaving the country. The invoice gives them the information they need to:

• Assess the correct tariffs and duties on imported goods
• Verify shipment contents and declared values for regulatory compliance
• Collect the right amount of Value Added Tax (VAT) and other taxes
• Detect fraud, misdeclaration or undervaluation of goods

Providing accurate, complete information on your commercial invoice helps your goods clear customs faster and reduces the risk of penalties for your business.

What to include on a commercial invoice

A complete commercial invoice covers several categories of information. Missing any of these can lead to customs delays, so it's worth checking every section before you ship.

Business details

Start with the basics about both parties in the transaction. Your commercial invoice should include:

• Seller (exporter) business name, address, phone number and email
• Buyer (importer) business name, delivery address and contact details
• Tax identification numbers for both parties, such as your VAT registration number and Economic Operators Registration and Identification (EORI) number
• Invoice number and date of issue

Having accurate contact details on both sides means customs officials can reach the right person if they have questions about the shipment.

Product details and HS codes

Customs authorities need a clear picture of what you're shipping. For each item in the shipment, include:

• A detailed description of the goods in plain language (for example, "100% cotton men's t-shirts" rather than just "clothing")
• The Harmonised System (HS) code for each product, which is an internationally recognised classification number
• Quantity and unit of measurement (for example, 500 units, 20 kg)
• Weight per item and total shipment weight

Getting your HS codes right is particularly important. An incorrect code can result in the wrong duty rate being applied, leading to overpayment or underpayment and possible penalties.

Financial information

The financial section of your commercial invoice lets customs calculate the correct duties and taxes. Include:

• Unit price for each item
• Total value of the shipment
• Currency used for the transaction (for example, GBP, EUR, USD)
• Payment terms and method (for example, bank transfer, letter of credit)
• Any discounts applied to the order

Always declare the true transaction value. Undervaluing goods to reduce customs duties is considered fraud and can lead to fines, seizure of goods or criminal prosecution.

Shipping details and Incoterms

Your commercial invoice should make clear how the goods are being transported and who's responsible at each stage. Include:

• Date of shipment
• Method of transport (for example, air freight, sea freight, road)
• Port or place of departure and destination
• Insurance and freight costs
• International Commercial Terms (Incoterms), such as Free on Board (FOB), Cost, Insurance and Freight (CIF) or Delivered at Place (DAP)

Incoterms are standardised trade terms published by the International Chamber of Commerce (ICC). They define which party is responsible for shipping costs, insurance and risk at each point in the journey. Specifying the correct Incoterm on your invoice avoids confusion about who bears the cost if something goes wrong during transit.

Country of origin

The country of origin tells customs where the goods were manufactured or substantially transformed. This is different from the country you're shipping from if, for example, you're re-exporting goods that were made elsewhere.

Country of origin matters because it determines which trade agreements, preferential tariff rates or trade restrictions apply. For UK exporters, correctly stating the origin of your goods can mean the difference between your buyer paying a reduced tariff rate under a free trade agreement or the full standard rate.

How to create a commercial invoice (5 steps)

Creating a commercial invoice doesn't have to be complicated. Follow these 5 steps to make sure your invoice meets customs requirements and helps your goods clear the border smoothly.

1. Gather required information

Before you start filling in your invoice, collect all the details you'll need. This includes:

• Your business name, address, VAT number and EORI number
• The buyer's business name, delivery address and contact details
• Full product descriptions, HS codes and quantities
• Unit prices, total values and the currency of the transaction
• Shipping method, insurance costs and the agreed Incoterm
• Country of origin for each product

Having everything ready before you start reduces the chance of errors and saves you from going back to fill in gaps later.

2. Choose your format

There are several ways to create a commercial invoice, depending on your business needs and shipment volume:

• Use accounting software like Xero with built-in invoice templates designed for international trade
• Download a commercial invoice template from your shipping carrier, such as DHL, FedEx or UPS
• Create your own format using a spreadsheet or document editor, as long as it includes all required fields

Whichever option you choose, make sure the layout is clear and easy for customs officials to read. A well-structured invoice reduces processing time at the border.

3. Complete the invoice

Fill in your commercial invoice with all the details you've gathered. Key points to keep in mind:

• Label the document clearly as "Commercial Invoice" in the header
• Assign a unique invoice number for tracking and record-keeping
• Use the shipment date, not the sale date, as customs authorities base their records on when goods leave the country
• Complete every required field; leaving sections blank can trigger additional inspections

4. Review and verify

Reviewing your invoice before shipping is one of the most important steps you can take. According to research by Womble Bond Dickinson, approximately 34% of customs declarations contain errors. These mistakes can lead to delays, additional charges and even seizure of goods.

Check that product descriptions match the actual shipment, HS codes are correct, declared values reflect the true transaction price and all business details are accurate. Pay particular attention to:

• HS codes matching the specific goods being shipped
• Declared values reflecting the actual sale price, not an estimate
• Consistent information across all shipping documents
• Correct spelling of business names and addresses

Taking a few minutes to verify your invoice can save you days of delays and significant unexpected costs at customs.

5. Create copies

Keep multiple copies of your completed commercial invoice. You'll typically need at least 3: one for your own records, one to accompany the shipment and one for the buyer.

Some carriers and customs authorities may request additional copies, so check their requirements before shipping. Maintaining good records also helps with Making Tax Digital (MTD) compliance, VAT returns and resolving any disputes that arise after delivery.

Common commercial invoice mistakes

Even experienced exporters make errors on commercial invoices. Knowing the most common mistakes can help you avoid them and keep your shipments moving.

• Vague product descriptions: writing "electronics" instead of "wireless Bluetooth headphones, model XYZ" forces customs to guess what's in your shipment, which often triggers inspections and delays.
• Incorrect or missing HS codes: using the wrong Harmonised System code can result in the wrong tariff being applied. You could end up overpaying duties or, worse, facing penalties for underpayment.
• Undervaluing goods: declaring a lower value than the actual sale price is considered customs fraud. HMRC can impose fines, seize goods and pursue criminal charges in serious cases.
• Mismatched information: if the details on your commercial invoice don't match your packing list or other shipping documents, customs may hold your shipment until the discrepancies are resolved.
• Missing or incorrect business details: forgetting to include your EORI number or VAT registration number can stop your goods at the border before they even reach a customs officer.
• Using the wrong date: your commercial invoice should show the shipment date, not the date of the sale or the date you created the document.

The consequences of these errors range from minor delays to significant financial penalties. For high-value or time-sensitive shipments, consider having a second person check the invoice before it's sent.

Commercial invoice vs other documents

International trade involves several types of documentation, and it's easy to confuse them. Understanding which document to use and when helps you stay compliant and avoid hold-ups at the border. With UK goods exports reaching 384.5 billion GBP in 2025 according to GOV.UK, getting your paperwork right matters more than ever.

Commercial invoice vs regular invoice

A regular invoice is a payment request used in everyday domestic transactions. It records what was sold, the price and the payment terms. A commercial invoice includes all of that plus additional information required by customs, such as HS codes, country of origin, Incoterms and detailed product descriptions.

If you're selling goods within the UK, a standard invoice is all you need. Once your goods cross an international border, you'll need a commercial invoice to clear customs.

Commercial invoice vs proforma invoice

A proforma invoice is a preliminary document sent to a buyer before the sale is finalised. It outlines the expected costs, product details and terms of the transaction, but it isn't a demand for payment and has no legal standing as a customs document.

You might use a proforma invoice when a buyer requests a quote, needs to arrange financing or must obtain an import licence. Once the sale goes ahead, you'll replace the proforma with a full commercial invoice for the actual shipment.

Commercial invoice vs CN22/CN23

CN22 and CN23 are customs declaration forms used for postal shipments. A CN22 is a small green label for low-value items (generally under 270 GBP), while a CN23 is a more detailed form for higher-value postal packages.

These forms are designed for Royal Mail and other postal services, not for commercial freight. If you're sending goods through a courier or freight service for commercial purposes, you'll need a commercial invoice rather than a CN22 or CN23.

Commercial invoice vs packing list

A packing list describes the physical contents of a shipment: what's in each box, the dimensions and the weight. It doesn't include pricing or financial details. Customs officials use it alongside the commercial invoice to verify that the declared contents match what's actually in the shipment.

You'll usually need both documents for international shipments. The commercial invoice covers the financial and legal details, while the packing list covers the physical logistics.

Manage international invoices with Xero

Getting your commercial invoices right is a key part of selling internationally, but managing the financial side of global trade doesn't stop there. You also need to track payments in multiple currencies, stay on top of VAT obligations and keep accurate records for HMRC.

Xero's online invoicing software lets you create professional invoices, track multi-currency transactions and reconcile payments automatically. You can set up invoice templates that include the fields you need for international trade, so you don't have to start from scratch every time you ship goods overseas. Get one month free.

FAQs on commercial invoices

Here are answers to frequently asked questions about commercial invoices.

How long should you keep copies of commercial invoices?

HMRC requires you to keep records of all import and export transactions for at least 4 years. Store your commercial invoices alongside related shipping documents so you can produce them if HMRC requests an audit.

Who is responsible for completing the commercial invoice?

As the seller or exporter, you're responsible for creating and providing the commercial invoice. Your buyer, shipping carrier and customs authorities will all use it, so accuracy is in your interest.

Does a commercial invoice need to be signed?

There's no universal requirement for a signature, but some countries and carriers do require a signed commercial invoice. Check the import regulations of the destination country and your carrier's requirements before shipping.

How many copies of a commercial invoice do you need?

You should prepare at least 3 copies: one for your records, one for the shipment and one for the buyer. Some carriers and customs authorities may require additional copies, so confirm their requirements in advance.

What happens if a commercial invoice has errors?

Errors can lead to customs delays, additional inspections, extra charges and in serious cases seizure of goods or fines. Always review your commercial invoice carefully before shipping to make sure all details are accurate and consistent with your other shipping documents.

Can you create your own commercial invoice?

Yes, you can create your own commercial invoice using a spreadsheet, document editor or accounting software like Xero. There's no mandatory format, but you must include all the information customs authorities require, such as product descriptions, HS codes, values and business details.