Export documentation lies at the heart of all international trade transactions. In provides exporters and importers with an accounting record; shipping and logistics companies with instructions of what to do with freight information; and banks with instructions and accounting tools for collecting payments.
Export documents are more complex than those used for domestic sales due to the special characteristics of international trade: geographical distance, different customs laws, different means of transport, greater risks, etc. The documents required for each shipment will depend on the conditions of sale (Incoterms) agreed between seller and buyer.
We describe below the top 10 export documents mentioning for each one: what are used for?, who prepares them? and to whom they are addressed?
EXPORT DOCUMENTATION: INTERNATIONAL PURCHASE ORDER
Usually, international transactions are based on the buyer´s Purchase Order. Issuance of an international purchase order is normally preceded by an exchange of information between exporter and importer with respect to the price, quality and quantity of products, etc.
When the transaction details have been agreed, the seller may issue an informal price quote or a more detailed proforma invoice. If the buyer accepts the seller´s price and other conditions, the buyer issues a purchase order.
The International Purchase Order may constitute a binding offer or a binding acceptance, depending on the circumstances. Usually in international transactions involving a large commercial buyer, the purchase order is often the main contract form and constitutes the first legally binding offer. In such cases, the seller´s signature on the purchase order will constitute the acceptance of the transaction.
INTERNATIONAL COMMERCIAL INVOICE
The International Commercial Invoice is the main document of export documentation because contains all the information about the international sale. The item, quantity, price for the products/services sold, delivery and payment conditions, as well as the taxes and other expenses that might be included in the sale, are detailed in an International Commercial Invoice.
The importer, with the original of the International Commercial Invoice, declares to the tax authority of his country the amount that it must pay, to who it is going to pay and the agreed means of payment. For the exporter, this document means a documentary evidence of the sales that it has made in foreign markets.
In operations with third countries, the International Commercial Invoice is part of the customs declaration, upon which, the taxes and tariff rights applied, must be paid at the moment at which the products enter the country. In operations with EC countries, this document is used as a declaration of the transaction and tax exemption to comply with the basic tax settlement conditions.
This document is prepared by the exporter and addressed to the importer and the import customs clearance.
The Packing List is a more detailed version of the commercial invoice but without price information. It must include, inter alia, the following: invoice number, quantity and description of the goods, the weight of the goods, number of packages, and shipping marks and numbers.
A copy of the Packing List is often attached to the shipment itself and another copy is sent directly to the consignee to assist in checking the shipment when received.
Although not required for all transactions, it is required by some countries and some buyers
This document is prepared by the exporter and addressed to the importer, the carrier and the import customs clearance.
IRREVOCABLE LETTER OF CREDIT L/C
In an Irrevocable Letter of Credit L/C, the importer´s bank agrees to the exporter (called “the beneficiary”) that the exporter will get paid if it can prove it has shipped the proper goods by providing the corresponding documents required by the Letter of Credit. Exporters like Letters of Credit because the advance assurance of payment ensures the seller that it will not waste time preparing or shipping an order to a buyer who ultimately refuse to accept or pay for the goods.
An Irrevocable Letter of Credit cannot be amended or canceled without the consent of all Parties.
The terms “Letters of Credit” and “Documentary Credit” mean the same thing. Exporters, importers and bankers in some parts of the world (USA, Asia) tend to use the term “Letter of Credit” or the abbreviation “L/C” while in other areas (Europe) prefer to use “Documentary Credit” or “D/C”.
The CMR transport document is an international consignment note used by drivers, operators and forwarders alike that govern the responsibilities and liabilities of the parties to a contract for the carriage of goods by road internationally.
The carrier usually completes the form, but the sender – in other words, the exporter – is responsible for the accuracy of the information and must sign the form when the goods are collected. The consignee will also sign the form on delivery, which is essential for the carrier to be able to confirm the delivery of the goods and to justify the payment for its services.
The CMR transport document is not a document of title and is, therefore, non-negotiable.
This document is prepared by the exporter and the freight forwarder and is addressed to the importer and the carrier.
BILL OF LADING B/L
A Bill of Lading B/L is a document issued by the agent of a carrier to a shipper, signed by the captain, agent, or owner of a vessel, furnishing written evidence regarding receipt of the goods (cargo), the conditions on which transportation is made (contract of carriage), and the engagement to deliver goods at the prescribed port of destination to the lawful holder of the bill of lading.
A Bill of Lading is, therefore, both a receipt for merchandise and a contract to deliver it as freight. There are a number of different types of bills of lading and a number of regulations that relate to them as a group of documents.
Since this is a negotiable instrument, the Bill of Lading may be endorsed and transferred to a third party while the goods are in transit.
This document is prepared by the shipping and addressed to the exporter, the shipping company trough the agent, and the importer.
AIR WAYBILL AWB
An Air Waybill AWB is a non-negotiable transport document covering transport of cargo from airport to airport.
The Air Waybill must name a consignee (who can be the buyer), and it should not be required to be issued “to order” and/or “to be endorsed” as it is not a title of property of the merchandise. Since it is not negotiable, and it does not evidence title to the goods, in order to maintain some control of goods not paid for by cash in advance, sellers often consign air shipments to their sales agents or freight forwarders’ agents in the buyer’s country.
The Air Waybill is not a negotiable document. It indicates only acceptance of goods for carriage.
This document is prepared by the IATA Transport Agent or the airline itself and is addressed to the exporter, the airline and the importer.
MULTIMODAL BILL OF LADING FBL
A Multimodal Bill of Lading FBL is an international transport document covering two or more modes of transport, such as shipping by road and by sea.
It is also used as a carriage contract and receipt that the goods have been received.
When it is issued “to the order”, the Multimodal Bill of Lading is the title of ownership of the goods and can, therefore, be negotiated.
As a rule, Multimodal Bills of Lading are not negotiable documents.
Only authorized forwarders integrated into FIATA (International Federation of Freight Forwarders Associations) can be issued this document. It is addressed to the exporter, Multimodal Transport Operator on the destination country, and the importer.
CERTIFICATE OF ORIGIN
The Certificate of Origin certifies the country in which the goods originated or in which the preponderance of manufacturing or value was added. It also constitutes a declaration by the exporter. Virtually every country in the world considers the origin of imported goods when determining what duty will be assessed on the goods. Nevertheless, the exporter´s own certification on company letterhead will suffice.
The origin does not refer to the country where the goods were shipped from but to the country where they were made. In the event the products were manufactured in two or more countries, the origin is obtained in the country where the last substantial economically justified working or processing is carried out. An often used practice is that if more than 50% of the cost of producing the goods originates from one country, the “national content” is more than 50%, then, that country is acceptable as the country of origin.
In most countries, Chambers of Commerce are the key agent in the delivery of certificates or origin. However, in some countries, this privilege may also be extended to other entities such as ministries or customs authorities.
The Inspection Certificate for pre-shipment inspection is a document issued by an authority indicating that goods have been inspected (typically according to a set of industry, customer, government, or carrier specifications) prior to shipment and the results of the inspection.
Inspection certificates are generally obtained from neutral testing organizations (e.g., a government entity or independent service company such as SGS o Bureau Veritas). In some cases the Inspection Certificate can come from the manufacturer or shipper, but not from the forwarder or logistics firm.
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