Essential Commercial and Financial Documents for Business Transactions

Essential Commercial and Financial Documents

Understanding the various commercial and financial documents is crucial for smooth business operations and international trade. Each document serves a specific purpose, ensuring clarity, legality, and proper record-keeping.

Order Proposal

An Order Proposal is a document by which the buyer or customer agrees to acquire goods ordered from the supplier.

• It is always signed by the person who makes the request.
• Each company will settle its own order.

Delivery Note

A Delivery Note is a document issued by the supplier or seller, detailing the goods being delivered.

• It accompanies a shipment of goods.
• It lists the description and quantity of the goods delivered.
• It is returned to the seller or consignor as proof of delivery.

Quotation

A Quotation should clearly state the price, quantity details, trade terms, delivery terms, and payment terms.

Pro Forma Invoice

A Pro Forma Invoice is an invoice provided by a supplier prior to shipment, used when applying for an import license or other funding purposes.

Commercial Invoice

A Commercial Invoice is a formal note for payment that provides details of the goods sold, payment terms, and trade terms.

Consular Invoice

A Consular Invoice shows information such as the consignor, consignee, and value of the shipment. It is required by some countries to facilitate customs and the collection of taxes.

Credit Note

A Credit Note is a letter sent by a seller to a buyer, stating that a certain amount has been credited to the buyer's account. It is issued in various situations to correct a mistake, such as when:

• An invoice amount is overstated.
• The correct discount rate is not applied.
• Goods spoil within the guarantee period.
• They do not meet the buyer's specifications.

Receipt

A Receipt is proof of having received a certain amount of money.

Cheque

A Cheque (or Check) is an order given by the holder of a bank account to deliver a certain amount of money to a third party.

Promissory Note

A Promissory Note is an agreement to pay a sum of money to another party.

Bill of Exchange

A Bill of Exchange is an increasingly obsolete commercial document.

Open Account

An Open Account is a payment arrangement where the exporter sends the goods and documents to the foreign buyer. The buyer pays the invoice when the goods arrive or within a certain period.

Payment Order

A Payment Order is an order or instruction from a sender to a receiving bank, directing the transfer of funds to a designated account or beneficiary. Payment orders direct payment of a specific amount to a third party.

Personal Cheque

A Personal Cheque is an order given by the holder of a bank account to deliver a certain amount of money to a third party. This is a specific type of cheque used for personal transactions.