Invoice is a commercial instrument, which is non-negotiable and is issued by the seller to buyer. It includes both the parties engaged in trading and describe, quantifies and lists the items that have been sold. It includes the date when shipment was done, price as well as discount, if given, mode of transportation, payment and the delivery terms. In certain instances, especially when the invoice is signed by the agent of the seller or by the seller itself, invoice act as the demand for the payment and also act as the title document after the payment is done in full. Different types of invoices are pro forma invoice, customs invoice,consular invoice, and commercial invoice. Invoice is also termed as contract of sale or bill of sale.
What is included in Invoice?
Invoice generally have some sections, which are listed below:
Date: It includes the date on which you created the invoice. Do not forget to add the date. If you to set certain limit of time for the payment, then get that date added in invoice, in order to make everyone aware of the due date of payment.
Address and the Name: Invoice should have the addresses and the names of the supplier and customer. If invoice is being created in the accounting software, then you might just need the customer’s email address. But it is recommended to add all the important information including the physical address to be added in the invoice, just in case you had to send the hard copy of the document instead of a soft copy.
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Contact Names: Contact names of either two businesses or the two individuals is included in an invoice. In order to ensure that cordial customer relations are maintained, it is recommended to know and spell each other’s name correctly.
Description of the Purchased Items: Description of the services or items that has been purchased is added in the description, including the quantities and prices as well. Generally, you will be having the standard inventory numbers and item descriptions with you. Keep in mind that you have to be detailed as well as specific while creating the invoice. This is mandatory, because going forward it avoids any kind of confusion and issues.
Payment Terms: Payment terms should be mentioned clearly, as it keeps both the party on same page and avoid unnecessary issues.
Importance of Invoicing
Invoice is considered as the pillar of any process where sale has been done. It is a vital document that work as a bill for the products and services that has been offered by your business. Invoice that is created properly, work as a legal document that works as the binding document. Invoices not just helps in tracking the payments and sales, or the stock levels or from balances, but Invoices also helps in tracking the missing or overdue payment, you can take formal actions, if your invoice is created properly.
Difference between Sales and Purchase invoice
Payment that is a buyer has to pay to the seller is shown in an invoice. Now, from the point of view of a seller, invoice used for the sale of either services or goods is termed as sales invoice.
Now from the point of view of the buyer, invoice showing the cost of services as well as goods offered is termed as purchase invoice.