In a digital world, the amount of paperwork businesses are inundated with may seem like a bit of a head-scratcher, but there you have it.
What’s more, as a business marketing products in another country, having the proper paper trail at every stage of your business chain can make or break whether your shipments make it over the border.
So, what must be included in customs documentation? Well, the truth is, quite a bit. To save you the overwhelm, we at Zee will boil it down to five crucial forms and why they matter for your purposes and the authorities in your destination country.
5 Essential Documents You’ll Need To Clear Customs
To learn what’s on your customs paperwork plate, read on to discover the five most important documents you’ll need to attain import clearance and reach foreign customers.
1. Certificate of Origin (COO)
The Certificate of Origin, or COO Certificate, is one of the most important customs documents you’ll need to ensure your shipment makes it over international borders. The main purposes of a COO certificate are to:
- Corroborate that a certain product was manufactured in its home country,
- Provide essential information regarding the products inside a given shipment,
- And confirm the destination country of an international shipment.
Every lateral shipment exchange between countries requires its own particular COO document.
In other words, shipments made from the U.S. to Canada will not use the same COO as shipments made to the E.U. Each COO must be signed, notarized, and, depending on the regulations in its destination country, verified by a specific chamber of commerce at home.1
When completed correctly, COOs are also vital to sellers’ interests because they can help to mitigate excessive costs incurred on import duties. There are two primary types of COOs:
Preferential COO – This type of COO may be used to confer import duties relief for shipments between countries when goods are considered valid in a destination country (e.g., per environmental standards) or in the case of an existing trade agreement.
Non-preferential COO – When a non-preferential or “ordinary” COO is used, sellers will still have to pay the tariffs imposed on their cargo. Rather than claiming import benefits, this kind of COO is strictly used to authenticate the origin country of a shipment.
Minimizing costs with a verifiable preferential COO may be more difficult if your product was resourced, manufactured, or produced in places other than its country of origin.
For instance, let’s say you’re in the business of selling eco-friendly lava lamps. The gooey wax you use was acquired in and shipped from Romania to then be manufactured in the U.S. In this case, you may have more difficulty obtaining a preferential COO when you ship your lamps abroad. For sellers wondering “How much does international shipping cost?”, the truth is price can vary business by business for a number of reasons given the intricacies of the customs process.
Given the complexity of the global supply chain and the multiple places where a products’ parts may originate, this is a common obstacle many shippers run up against. Your best bet is to work with a third-party partner versed in these intricacies who can get you the best deal possible, all while taking into account international shipping restrictions that will play a pivotal role in whether your goods make it past customs.
2. Commercial Invoice
Next up: your commercial invoice. The purpose of the commercial invoice is twofold:
- To legally cement the terms of a transaction between seller and buyer,
- And to notify customs authorities of all information regarding the imported goods, including the parties involved in the transaction.
The International Trade Administration recommends working with a third-party consultant to ensure commercial invoices are completed per the rules determined in a destination country.2
Commercial invoices provide a host of information, including:
- Information about the seller,
- Information about the buyer,
- Information about the shipment (e.g., the price of its contents),3
- Harmonized System (HS) or Harmonized Tariff System (HTS) number,
- The destination country,
- The party receiving the product (importer),
- And how the shipment will be transported once it hits the ground.4
Remember, a pro forma invoice cannot be used as a substitute for a commercial invoice at border protection. Customs authorities need to know your wares have been bought and paid for. They can only ascertain the legality of your product and the appropriate duties it will incur using a legally-binding commercial invoice.
3. Packing List
If you’ve ever packed a suitcase for a long vacation, you know how important it is to make a mental list of the items you’ll be bringing in tow so you can keep all your necessities at your fingertips.
In a similar vein, customs packing lists transparently itemize the contents of your shipment so customs officials (and, later, carriers or freight forwarders) can more easily verify the cargo crossing over the border. These should be affixed to the outside of the shipping container to make the clearance process smoother for those managing your shipment.
4. Bill of Lading
A Bill of Lading, also referred to as a BL, B/L, or BoL, is an article of customs paperwork designed to document the journey and terms of a shipment’s transport. It has three principal roles:
- To serve as a document of title, establishing the legal owner of a shipment,
- To serve as confirmation that an item has been shipped to its next destination,
- And to define the agreement between the owner and carrier service regarding where and how a shipment is to be transported.
BoLs may also be issued as a receipt for the transportation of a product, and they must be signed by the shipper, carrier, and importing party to have legal bearing.5
Multiple types of BoL forms may be used in the course of transport, and each differs according to a host of specifics. Some include:
- Carriage method, such as air vs. rail transport,
- Designation of the consignor (recipient) and potential reassignment thereof,
- And the condition of your product on its way to its ultimate destination.
Not only are BoLs indispensable to the transport process, but they also create a legally-recognized paper trail that can save you a major headache when sending goods overseas. This is because, if carried out incorrectly, international shipping leaves plenty of room for missing, lost, or even stolen shipments.
In the event of a shipment loss, any errors or informational omissions in your BoL(s) will make retrieval inordinately challenging—and can often result in financial losses you won’t be able to recover without adequate documentation.
5. Certificate of Insurance
When you’re covering as much ground (or air) as a shipment making its way to a foreign country, you can bet that there’s a wide margin of human error to contend with until your products make it safely to their destination.
This is why your certificate of insurance is one of the three most critical documents to include with your shipment when moving goods overseas, alongside your commercial invoice and BoL. Your policy of insurance will determine:
- Who is liable to cover any costs incurred in the hero’s journey from point A to point B (and everywhere in between),
- And how much of those costs a party is expected to cover in the event of mishandling.
Insurance policies play a major role in the designated International Commerce Terms. These Incoterms, created by the International Chamber of Commerce, provide a globally-recognized shorthand designed to hold sellers and buyers to account when upholding a trade contract.6
In general, it’s most common for sellers to purchase insurance through their courier or shipping partner, who offer a more nuanced understanding of the risks involved when transporting specific types of goods to specific countries.
Best Practices For Handling Customs Documentation
While the documents listed above are considered the most important to have squared away for international shipments, the truth is that the paper trail extends far beyond these five alone.
Arrival notices, import licenses, and other forms must be included every step of the way.
International commerce is staggeringly complex. Not only do laws governing the customs process differ from country to country— but they’re also dynamic, constantly in flux. So, if your documentation isn’t up to snuff, or your products don’t meet the standards in their destination country, you may be subject to penalties, including but not limited to:
- Hold-ups at customs control,
- Excessive fees in duties and taxes,
- Lost or damaged products,
- And the inability to litigate and recover your investment due to improper documentation.
Customs clearance procedures differ in rigidness from country to country, and it’s not uncommon to experience a stall or receive a citation for everything from incomplete documentation to papers that aren’t assembled the way they’re supposed to be.
The best way to make sure you’ve got all your bases covered is to work with an international shipping partner who has the resources to take care of the granular details and keep up-to-speed with shifting trade laws in every country you’re shipping to.
Leave Your Shipping Documentation To Zee
Rather than blow a gasket fighting to stay on top of the jumble of required customs documents for import, you’ll be giving your business an advantage by letting a seasoned shipping partner shoulder the burden of proper documentation.
As a seasoned global shipping partner, Zee can:
- Serve as your business’ IOR (Importer Of Record) and manage all required documentation, duties, and fees for customs clearance,
- Put on the customs broker hat and smooth out any hold-ups that arise with customs authorities,
- And handle the transport of your shipments to their final destination once they’re in the clear.
Zee’s knowledge base on shipping, tax, and customs compliance extends around the world, and it’s always growing. Break into national markets, without the paperwork headache—with Zee!
- Drip Capital. What is Certificate of Origin (COO) | Types, Issuing Authority & more. https://www.dripcapital.com/resources/blog/certificate-of-origin
- International Trade Administration. Export Documentation: Commercial Invoice. https://www.trade.gov/commercial-invoice
- International Trade Administration. Common Export Documents. https://www.trade.gov/common-export-documents
- Drip Capital. Difference between a Proforma Invoice and a Commercial invoice. https://www.dripcapital.com/resources/blog/proforma-invoice-vs-commercial-invoice
- Investopedia. Bill of Lading. https://www.investopedia.com/terms/b/billoflading.asp
- Investopedia. Incoterms. https://www.investopedia.com/terms/i/incoterms.asp