Commercial Invoice

Document required by customs to determine true value of the imported goods, for assessment
of duties and taxes. A commercial invoice (in addition to other information), must identify
the buyer and seller, and clearly indicate the (1) date and terms of sale, (2) quantity, weight
and/or volume of the shipment, (3) type of packaging, (4) complete description of goods, (5)
unit value and total value, and (6) insurance, shipping and other charges (as applicable).

Shipping Invoice
A shipping invoice is a general accounting of items sent from one individual or company to
another. Standard information includes the name and location of the person or organization
sending the goods as well as the name and location of the receiving party. An itemized list of
the goods, including the cost of each item, the number of each item and the total cost of the
items is also included. The total charges to the recipient, including applicable tax and
discounts, is also included.

Differences between Commercial Invoice & Shipping

Invoice
Because commercial invoices are used in international shipping, summary information is
considerably more detailed than that of a standard shipping invoice. Along with basic shipper
and receiver information, a commercial invoice includes specifics regarding the date and
terms of sale; the quantity, weight or volume of items in the shipment; a description of the
goods; a description of the packaging; per-unit value as well as total value; and insurance cost
and shipping charges.

Shipping invoices are fairly simple and straightforward, they can be created easily with no
requisite specialization. Commercial invoices, on the other hand, are inherently more
complex because of the level of detail required.

Letter of Credit

L/C is a written commitment to pay, by a buyer's or importer's bank (called the issuing bank)
to the seller's or exporter's bank (called the accepting bank, negotiating bank, or paying
bank). A letter of credit guarantees payment of a specified sum in a specified currency,
provided the seller meets precisely-defined conditions and submits the prescribed documents
within a fixed timeframe. These documents almost always include a clean bill of lading or air
waybill, commercial invoice, and certificate of origin. To establish a letter of credit in favor
of the seller or exporter (called the beneficiary) the buyer (called the applicant or account
party) either pays the specified sum (plus service charges) up front to the issuing bank, or
negotiates credit.

Letters of credit are formal trade instruments and are used usually where the seller is
unwilling to extend credit to the buyer. In effect, a letter of credit substitutes the
creditworthiness of a bank for the creditworthiness of the buyer. Thus, the international
banking system acts as an intermediary between far flung exporters and importers. However,
the banking system does not take on any responsibility for the quality of goods, genuineness
of documents, or any other provision in the contract of sale. Since the unambiguity of the
terminology used in writing a letter of credit is of vital importance, the International Chamber
Of Commerce (ICC) has suggested specific terms (called Incoterms) that are now almost
universally accepted and used. Unlike a bill of exchange, a letter of credit is a non-negotiable
instrument but may be transferable with the consent of the applicant. Although letters of
credit come in numerous types, the two most basic ones are (1) Revocable-credit letter of
credit and (2) Irrevocable-credit letter of credit, which comes in two versions (a) Confirmed
irrevocable letter of credit and (b) Not-confirmed irrevocable letter of credit.

Bill of lading
It is a document signed by a carrier (a transporter of goods) or the carrier's representative and
issued to a consignor (the shipper of goods) that evidences the receipt of goods for shipment
to a specified designation and person. It is a document issued by a carrier, or its agent, to the
shipper as a contract of carriage of goods. It is also a receipt for cargo accepted for
transportation, and must be presented for taking delivery at the destination.

Among other items of information, a bill of lading contains (1) consignor's and consignee's
name, (2) names of the ports of departure and destination, (3) name of the vessel, (4) dates of
departure and arrival, (5) itemized list of goods being transported with number of packages
and kind of packaging, (6) marks and numbers on the packages, (7) weight and/or volume of
the cargo, (8) freight rate and amount.

It serves as a proof of ownership (title) of the cargo, and may be issued either in a negotiable
or non-negotiable form. In negotiable form, it is commonly used in letter of credit
transactions, and may be bought, sold, or traded; or used as security for borrowing money. A
bill of lading is required in all claims for compensation for any damage, delay, or loss; and
for the resolution of disputes regarding ownership of the cargo. The rights, responsibilities,
and liabilities of the carrier and the shipper under a bill of lading (often printed on its back)
are governed generally either by the older Hague rules, or by the more recent Hague-Visby
rules. See also lading.

'Bill of Exchange'
A bill of exchange is a written order used primarily in international trade that binds one party
to pay a fixed sum of money to another party on demand or at a predetermined date. It is a
written, unconditional order by one party (the drawer) to another (the drawee) to pay a certain
sum, either immediately (a sight bill) or on a fixed date (a term bill), for payment of goods
and/or services received. The drawee accepts the bill by signing it, thus converting it into a
post-dated check and a binding contract.

Bills of exchange are similar to checks and promissory notes. They can be drawn by
individuals or banks and are generally transferable by endorsements. The difference between
a promissory note and a bill of exchange is that the latter is transferable and can bind one
party to pay a third party that was not involved in its creation.