The global market is brimming with new businesses from various parts of the world. Widespread Internet access and different technological advancements enable contemporary business owners to work with domestic and international clients. This circulation of goods, people and services serves as a great boost for the global economy. While many business opportunities emerge that way, there are also some considerations that have to be taken into account in such a vivid market. Since financial and legal regulations differ from country to country, it’s imperative to learn more about preparing financial documentation for local and international business deals.
Definition and use of commercial invoices
A commercial invoice is an official trade document that specifies who sells how much of what to whom. Moreover, it contains many other details about the amount and type of the merchandise in question. When you’re selling goods to a buyer, you have to cite all the items, the price for each of them, as well as the total sum. That way, the buyer will be familiar with every single cent they spend on your goods. For instance, if a client wants to buy 50 chairs from your website, the invoice for that transaction will have to include the following points:
- Your business name and logo – It should be placed at the top of the invoice.
- Client’s name and details.
- Invoice number – Develop your own invoice numbering system, e.g. start with 0001 for your first invoice. This is important for your internal use.
- Your physical address, phone number, website and email address and various online contacts (Skype, Viber and other VoIP services). The latter are extremely important for international clients.
- Detailed specifications of purchased/sold goods.
- Payment information (discussed to detail later in the text).
- Country of origin of the sold products.
These features should be a part of every single invoice, no matter if it’s issued to a domestic client or an international business associate.
Bank payments for domestic clients
Now that you’ve mastered the basics of invoicing, your next big goal is to learn how to deal with domestic invoices and how to learn more about international invoicing. When it comes to sending these documents to your domestic customers, things are much simpler in financial and legal terms. The first thing you need to do is include the most practical payment option for both you and your domestic clients. Since domestic transactions are somewhat easier to grasp than their international counterparts, the best option here is to use your company’s bank account to accept those payments. You need to think about your customers, as well. This is why offering them an option to buy your products with their bank cards is a user-friendly solution. Moreover, you don’t have any currency exchange factors here, so banks seem to be the most convenient payment solution for your local buyers. Therefore, your invoice for this matter should also contain the payment details that will enable them to pay you via your bank account.
International invoicing concerns
When you’re filling out an invoice for an international client, the issue of currency can be a tricky one. For instance, it might happen that you’ve never heard of a currency your client wants to pay you with. This problem is easily solved, though. You can download one of the foreign currency apps and find the exchange rates for every single currency in the world. Also, the dollar is a recognized currency worldwide, so you might want to set it as the main currency for your needs.
On the other hand,international invoicing raises some other questions that can’t be solved with a simple app. The most important concern here is the amount of fees you’re going to pay on such transactions. In this case, banks seem as quaintly outdated institutions. What you should aim at for this purpose are cutting-edge online payment solutions. For instance, Stripe and PayPal are used worldwide and they both come with a wide range of practical invoicing options, such as on-spot exchange rates. Moreover, their fees are usually lower than the ones set by banks.
Apart from that, you can also count on various software features that will help you make an original corporate invoice template and track your invoicing history.
Customs and shipments – your business allies
While you might consider international invoices a real nuisance that only wastes your time, this topic can be approached from a different angle. If you run your business in accordance with the law, you should support the existence of the customs and different regulations regarding imported goods. That way, business owners who manufacture and/or sell products in compliance with the international standards will get ahead of the curve.
What’s more, retaining high quality of your products will ensure that you get all the licenses necessary to export them. Moreover, every customs service will grant your products an import license if they meet those quality standards. For all these reasons, you should make your international invoices as detailed as you can. For example, add your export licenses to each of your invoices. Moreover, if they consist of parts produced in different countries, list each of them and keep your products transparent. Finally, learn more about the Harmonized System (HS), which is the central international organization for classifying and naming traded goods.
Current affairs in the international trade
Although international traders have to meet dozens of different regulations when making invoices for their deals, many countries are doing their best to make this procedure easier and faster.
In line with that, a growing number of countries form special economic communities, so as to boost their national economies through the faster exchange of goods and services. For instance, the members of NAFTA don’t have strict trade regulations. Similarly, the countries of the European Union also have a common market, to which they can export products without any legal restraints. The good news for some Asian countries is that the ASEAN organization is expanding the Free Trade Area, which will reduce alleviate the difficulties related to the shipment of goods and invoicing issues. To top it all off, those unions are also working on signing new contracts that will make international trade a real cakewalk.
Manufacturing or selling goods to different clients is already a daunting task. And when you have both international and domestic customers, the whole process becomes even more demanding. However, if you learn how to make an invoice in a fast and informative way, your work performance will be much higher. Since today you score great deals with companies from different countries, keep your invoices as resourceful and detailed as possible, no matter if they’re for your local client or a business from the other side of the globe.
AuthorBio: Mark is a biz-dev hero at Invoicebus – a simple invoicing service that gets your invoices paid faster. He passionately blogs on topics that help small biz owners succeed in their business. He is also a lifelong learner who practices mindfulness and enjoys long walks in nature more than anything else.