Payment Documentation Requirements/Required Documents and How and When to Apply Documents

Bill of Lading
A bill of lading (B/L) is a document issued by a transportation carrier (such as a motor, rail, or air carrier) to a shipper acknowledging that the carrier has received the goods for shipment. The bill of lading
 * acknowledges that the goods have been placed on board a particular vessel (or truck or other conveyance) for delivery to a specific destination.
 * states the terms in which the goods are to be carried.
 * serves as the contract between the shipper and the carrier.
 * stipulates where, when, and by whom goods are to be delivered.
 * stipulates where, when and by whom freight charges are to be paid.
 * may be a negotiable document, which means it is the tool by which ownership of the goods are transferred.

Generally speaking, the bill of lading serves both as a receipt of the goods and an agreement to transport the goods to a specific destination and consignee in return for payment of transportation charges.

Note: For air freight shipments this same document is called an Airway Bill.

Certificate of Origin
A certificate of origin is required by many countries; it certifies the country in which the imported goods were mined, manufactured, or assembled. The certificate of origin is used to reduce duty and taxes when there is a trade agreement in place between the importing and exporting countries. Information about whether a certificate of origin is needed and what is required can be obtained from the consulate of the importing country or in a current export reference guide. Certificates of origin are normally issued by an exporter or a party acting on their behalf and must be signed and sealed by a local chamber of commerce.

Commercial Invoice
The commercial invoice is the bill of sale and an exporter’s request for payment from a buyer. It is also important to any third party who needs to determine the value of a shipment, such as a bank that is asked to discount a draft, customs officials who must determine applicable duties and taxes, or an insurance company that has been requested to insure the goods while in transit. The commercial invoice is one of the major documents needed by an international manager and applies in every situation. This document is crucial to the accounting department for collections purposes. When issued, it normally triggers the reduction of inventory in an exporter’s tracking/computer system.

Consular Invoice
A consular invoice is a commercial invoice that has been reviewed by the consulate of the buyer's country for the purpose of determining the value and quantity of the shipment and to ensure that no indigenous laws or regulations governing imports are being broken. This process must be completed before the goods are exported.

Consular invoices may be required by various countries to facilitate customs at the destination as well as to facilitate the collection of taxes. Consular invoices include the owner’s declaration of the value of the shipment and a full description of the goods exported as well as all discounts or rebates being offered. These invoices are certified by the consul of the destination country. They generally include a sworn statement not only to the accuracy of the declarations made but also that there are no other invoices for the same shipment.

The consul may provide the required forms. Once the form is completed, the consul will affix a stamp or certification. There is sometimes a small fee charged by the consul for this service. Each space must be filled in accurately with nothing omitted. Some countries impose fines for the most trivial omissions or errors. For example, some countries penalize the buyer or seller for the use of ditto marks or for going outside of the assigned box in responding to a specific question.

Import License
If required, an import license is usually required by an importer from the country of destination. The process, time and costs associated with obtaining an import license will vary depending on the country as well as the commodity being shipped. It is essential that the import license be obtained before the goods are manufactured and/or shipped. If the goods arrive without this document, they will not be allowed entry into the country and will either be confiscated, destroyed or returned at the expense of the seller.

Packing/Weight List
This document is issued by the seller/exporter to verify quantity, box count and/or weights and measures of the commodity being shipped. The packing list is used by the freight forwarder to issue the bill of lading, by import and export customs to verify quantity and to apply applicable duties, and by the bank and buyer to verify counts and any other pertinent information.

Proforma Invoice
Although last in this list, since it is alphabetical, this document is the first one issued by the exporter. A proforma invoice is used as an order confirmation/quote as well as for an application for a letter of credit. Unlike in US domestic transactions, a purchase order is a binding document that confirms an order and requires a buyer to pay if the specifications are followed. If a buyer does not pay, legal recourse is available to the seller. In international transactions, the purchase order as described above does not exist. The proforma invoice is a non-binding document; however, it allows a buyer and seller to confirm their responsibilities in the transaction in writing with signatures. This document is extremely helpful in avoiding transaction discrepancies and wasted expenses.