Certified Supply Chain Professional (CSCP) Practice Exam

What is the function of a pro forma commercial invoice?

1. To serve as a warranty for goods

2. To provide a quote and documentation for securing a letter of credit

3. To confirm the delivery of goods

4. To document the insurance of cargo

The correct answer is: To provide a quote and documentation for securing a letter of credit

The function of a pro forma commercial invoice primarily revolves around providing an estimate of the goods to be sold, which helps in securing a letter of credit from a financial institution. This document outlines the details of the transaction, including product descriptions, quantities, and prices, and serves as a preliminary invoice to facilitate trade. It plays a crucial role in international commerce, as it provides the necessary information that banks require to issue a letter of credit, ensuring that the seller will receive payment once the buyer meets the stipulated terms. Therefore, using a pro forma commercial invoice not only aids in the financial transaction but also establishes trust and clarity between the seller and buyer regarding the pricing and terms before the actual shipment takes place. Other choices do not accurately depict the primary role of a pro forma commercial invoice. For instance, a warranty for goods typically relates to quality assurance rather than pricing or payment facilitation, and confirming the delivery of goods is more aligned with a shipping document than an invoice. Lastly, documenting the insurance of cargo pertains to risk management and insurance coverage, not the financial terms of the sale.