Invoice

Invoice is a bill or document issued by the seller or exporter to the buyer or importer mentioning the details of goods delivered. It is the statement of goods sold which is prepared by the seller or exporter stating the particulars of goods dispatched and net payable amount. It discloses the details of goods delivered like quantity of goods, types, rate, total price, other expenses, means of payment or transportation, detail of buyer & seller, discount, etc. It is prepared to inform buyer about the payable amount, provide evidence for the sale transaction, provide the basis to maintain accounts for the goods bought and sold, determine commission to consignee and to fix the selling price of the goods bought.

Items Mentioned in the Invoice

The invoice includes the following information:

1. The name and address of both seller and buyer
2. The date of dispatching the goods
3. The invoice number and order number
4. Description, quantity, rate and amount of goods supplied
5. Trade discount allowed
6. Expenses incurred by the seller on behalf of the buyer
7. Authorized signature of the seller
8. Terms and conditions and other particulars

Importance of Invoice

The invoice is the outcome of trading activity which is equally important in home trade, foreign trade and in a consignment. The preparation of invoice is compulsory for the purpose of providing evidence, information and record when a sale transaction takes places. The importance of invoice can be stated as follows:

1. Invoice provides detail information about the price of goods such as unit rate, total amount, discount amount, etc.
2. It also gives information about the other charges to be paid by the buyer or importer.
3. It makes a basis for keeping a record of total purchase and sale of goods.
4. It is a basis for reminding both buyer and seller about taking and making of payments of goods in time.
5. It helps to confirm whether the goods received are as per the order placed or not.
6. It provides the formal evidence of the sale transaction.
7. It provides the basis for fixing the selling price of the goods.

Types of invoice

There are different types of invoice used in import and export trade. According to the expenses to be included in it, invoices are of five types. The following are the main types of invoices used in foreign trade:

1. Loco invoice
   Loco means local. Loco invoice states the local or godown price of the exporter. It mentions only the cost of goods. It does not include any item of expense incurred in the carriage of goods from the place of the exporter to the place of the importer. All the expenses incurred in the carriage of goods are borne by the importer himself.
   
   
2. F.O.B. invoice

   

   
   It is free on board invoice. It is also known as free delivery price up to board the ship. It is the invoice issued at that time when all the expenses up to the shipboard are borne by an exporter. The other expenses from shipboard to importer’s godown are borne by exporter himself. It includes all the expenses incurred in the carriage of goods till they are loaded on board the ship. Thus, it includes packing charges, cartage and loading charges.
   
   
3. C and F invoice
   It is cost and freight invoice. It is prepared by adding the freight of ship to the F.O.B. price. It is the invoice issued at that time when it is agreed to sell goods by bearing only the cost price and freight charges of goods. Only the insurance charge in the condition is free to the importer, which is borne by exporter himself.
   
   
4. C.I.F. invoice

   

   
   It is the cost, insurance, and freight invoice. It is prepared by adding the marine insurance to the C and F price. It is the invoice issued at that time when it is agreed to sell goods by bearing all the other charges along with cost price of goods by the importer himself. No any charges are exempted to the importer.
   
   
5. Franco invoice
   Franco means free. It is the free delivery price up to the godown of the importer. It is the invoice issued at that time when it is agreed to sell goods exempting all other charges effects up to the godown of an importer, except the price of goods. The importer should pay only the price of goods as per the agreement. All other charges are free.