China has become a commercial hub and following that it is having business transactions with a number of individuals from a number of countries. Due to the number of international transactions, the commercial invoice is very common for international trade and ocean freight shipping.
Primarily a commercial invoice is a legal document issued by a seller/exporter to the importer/buyer in an international transaction and serves as a contract and proof of sale between the buyer and seller. It normally details the price, value, and quantity of goods being exchanged. It should also include the trade or sale conditions agreed upon by both the buyer and seller of the transaction in question.
It also contains information relating to the transaction, that is, the invoice number, invoice date, order number, total sale amount, currency, and payment instructions. It is important that it should contain the address details of both the exporter and the importer.
The Chinese government is very strict on issues of taxes and has been at the forefront to advocate for its citizens and people doing business with them to pay taxes. This has given rise to the self-billing invoices that are normally raised by a supplier for the customer so that payment can be effected.
This arrangement is made possible when both the customer and the supplier have registered for VAT. One merit of this invoice is that the customer is not kept waiting for an invoice from the supplier to be able to reconcile it with the timesheet of payment.
On the supplier’s side, it has merit too in that there is no need to produce an invoice as once the timesheets are approved, and then a customer is able to generate an invoice. Self-billing is also considered advantageous as it is a time saver due to less administration for suppliers and customers, reduced costs, and less time spent on invoice management.
In China, it is important that the principle of proper accounting is adhered to, by ensuring that every transaction made by a business is proved by means of an invoice. Due to businesses having a number of transactions on a daily basis, multiple transactions can be billed using a collective invoice.
Primarily a collective invoice documents several goods or services provided to a customer or a number of customers over an agreed time. it has an advantage when a business provides regular services for a single customer over a long period of time and would like to settle the same periodically. It helps when a business is reviewing some of its loyal customers for purposes of rewarding them or marketing to the new products considering the products that they order for regularly.
The Chinese government requires that buyers should be presented with a bill of sale early enough for a shipment or a delivery of goods. The invoice will primarily describe the purchased items, as well as the shipping weight and the transportation charges. Most of the Pro-forma invoices in china are used for international transactions, especially for customs purposes on imports.
In China, a Pro-forma invoice differs from a simple price quotation because it is a binding agreement, even though the terms of sale are subject to change. Businesses in a number of industries use this type of invoice to meet their internal purchasing approval processes. The invoice has also been praised for streamlining the sales processes by eliminating additional back-and-forth after a sale goes through, as all terms would have been agreed on upfront.
China has been known to be very good in the building and construction industry and at times they take up very big projects from third world economies.
Some of the third world countries cannot raise the budgets for those projects hence they have got to pay the money in phases. This has made it possible for the Chinese business people to take up projects in any part of the globe, then execute the project in a timely manner as payments are made in phases.
This also applies to small projects being executed by small entrepreneurs who may not fund some projects of certain magnitudes. It gives the entrepreneurs an opportunity to bid for projects that their investments cannot handle and they depend on the money paid in phases to finish the project in good time.