Invoice

 Invoice

Introduction:
An invoice or bill is a document issued by a seller/exporter to the buyer/importer, indicating different aspects of goods like types of goods, quantities, agreed prices, other expenses, mode of payment or transportation etc. It shows the amount that a buyer/importer has to pay to the seller/exporter. An invoice indicates the buyer must pay the seller according to the payment terms. The buyers/importers are given a specific time to make payment for the goods.

Invoice Contains:

Name and contact details of the seller with a reference number. Date of the invoice Invoice or bill no. Tax payments if relevant Tax or company registration details of seller if relevant. Name and contact details of buyers Date that the product was sent or delivered. Purchase order no. Description of the product quality, quantity etc. Unit price of the product, if relevant Discount allowed to the buyer/importer Total amount charged Payment terms including method of payment, date of payment, and details about charges late payment etc.

Specimen of Invoice

Types of Invoice:

Introduction:
In the age of business, different types of invoices are used by the seller/exporter to the buyer/importer. The type of invoice depends on the condition and costs included in it. Some of the important types of invoice used in foreign trade are discussed below:

1. Loca Invoice:
   The word 'Loco' is derieved from local. It us that types of invoice in which local price of goods is included. Under this system, only the local price of goods is included i.e. other charges like insurance,freight, boarding or loading charge, transportation cost are excluded. The invoice in which the seller or exporter does not pay any other expenses on behalf of the buyer or importer but merely adss the amount of profit ot the cost of the goods sold is called loco invoice. The pricing pattern of a loco invoice is:
   Loco Invice = Local Cost of goods + Profut margin
2. Free on Board (FOB):
   In this invoice, the seller takes the responsibility of paying all the expenses incurred carrying the goods to the ship. Even the boarding expenses incurred are paid by the seller. However, the charges after the board to the importers place are not included in the invoice and those expenses are to be paid by the importer. The pricing pattern of FOB invoice:
   FOB = loact cost + all expenses incurred up to the ship board.
3. Cost and Freight (C & F):
   The expenses that includes all the expenses such and cost and freight of goods except the insurance charge is called the cost and freight invoice. Insurance charge should be born by the importer in this type of invoice. In this invoice, the seller takes the responsibility of paying even the freight amount of goods; it includes cost of goods, normal profit, transportation up to the ship, loading charge as well as the shipment charges. The pricing pattern of Cost and Frieght Invoice:
   Cost and Frieght Invoice = Cost of goods + Profit + Transportation of goods to Ship + Loading Charge + Frieght of ship
4. Cost, Insurance & Frieght Invoice (CIF):
   Invoice which is prepared including all the expenses along with insurance premium is known as CIF invoice. In this invoice, the seller takes the responsibility of paying all the expenses including insurances of the goods. The pricing pattern of Cost, Insurance and Frieght Invoice:
   CIF = Local cost + expenses incurred up to the shipbaord + freight of ship + insurance
5. Franco Invoice:
   Franco means free. It is free delivery price up to the godwon of the importer. The invoice drawn by exporter without showing the expenditure including carrying charges from exporter's warehouse to the importer's warehouse. All the expenses incurred are born by exporter. Under this system, all the expenses like freight, export duty, loading and unloading charge, insurance etc. are paid by the exporter but not shown separately in invoice. The importer makes the payment of the bill in lump sum and thus seems every things like free to him except the price of goods. The pricing pattern of Franco Invoice
   Franco Invoice = local cost + expenses incurred up to the ship board + freight of ship + insurance charge + other expenses incurred till the goods are placed in the godwon of importer

Importance of Invoice:

1. It provides the descriptions of the goods like price, quantity, brand, discounts etc.
2. It serves as a valid proof of purchase or sells of goods.
3. It provides information about the last date of making payment for the price of the goods.
4. It can be presented as evidence in the court of law in case of any disputes between the buyer and the seller.
5. It helps the transport company and the buyer to check the demanded items of goods.
6. It helps to settle the tax ability to both the buyer and seller.

Means of Payment

Trade is the act of transferring goods and services between the buyers and seller. Once the goods are transferred/delivered to buyer, buyer has to make the payment of the value of goods and services. In general case, buyer immediately pays cash after getting the goods . The buyers used different instruments to make payment to the seller when the payment is not made in cash. In the modern world, common instruments of payment include money, cheque, debit card, credit card, or bank transfer. This instruments are called the means of payment. The means of payment used in trade can be classified as traditional and modern method.

Traditional Means of Payment

1. Money Order:
   It is a way of transfering money from one place to another using post office. Under this, the sender deposits the amount to be transferred along with the required charges in the post office. The post office issues a telegraphic order to the nearby post office of the receiver to make the payment of the specified amount. This type of service is provided by private sectro such as Western Union Money Transfer, Moneygram etc nowadays. The private sector uses the internet service to transfer money to the receiver.
2. Telegraphic Transfer:
   It is one of the means of transferring money from one person or party to another person or party through bank. Under this, the sender fills a specified form and submits it to the bank along with the amount to be transferred and bank charges. Then, the bank order another bank through telegram to make the payment of the specified person. This is safe and reliable method of transferring money.
3. Hundi:
   A hundi is regarded as an informal mode of remitting money from one place or country to another through the networks of hundi brokers. In this system, the person desiring to pay, deposits the sum of money to a hundi broker of his own location for this he has to pay a certain amount of commission. Then, the hundi broker of the buyer's city ot town instructs the hundi broker of the seller's town to pay the sum of money. It is not legally certified mode of payment, it is totally dependent on the mutual consideration between the payer and the broker. A hundi is not categorized as a negotiable instrument like cheque and bank draft.

Modern Means of Payment

1. Bank draft
2. Cheuqe
3. SWIFT (Society for Worldwide Inter bank Financial Telecommunication)
4. Letter of Credit (LC)
5. Credit Card
6. Debit Card
7. ATM (Automated teller machine

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