Skip to main content

An invoice is a commercial document that maintains a transaction record made between a buyer and a seller. The invoice specifies whether the goods or services were purchased with cash or credit. Invoices are a critical component of accounting internal controls. An invoice also plays a big role in audits. 

There are different types of invoices, including paper receipts, bills of sale, debit notes, sales invoices, or online electronic receipts or records. Invoices outline payment terms, unit costs, shipping and handling charges, and any other terms pertinent to the transaction. The charges contained on an invoice have to be approved by specific management personnel who are responsible for overseeing invoices.

What is an invoice? 

Invoices contain itemized lists that record products or services provided to customers, the amount due, and the method for customers to use to pay for services or goods. Invoices may be physical or electronic. Businesses include payment options on their invoices. The invoice includes the due date that payment is expected to be received. For return customers, a business may schedule multiple payments on an invoice. 

What is the function of an invoice? 

A business provides invoices as a way to demand payments. Invoices are legally binding agreements that show both parties’ consent to the payment conditions and the price. There are many benefits to using invoices.

  • Create a legal record. An invoice provides a legal record of a sale. It includes all the details such as what was purchased, when it was purchased, who made the purchase, and who sold the item(s).
  • Track payments. Another function of an invoice is to keep a running record of payments and what is owed.
  • Establish a contract. An invoice is the evidence of a contract established between a buyer and a seller. It has all the terms of a contract.
  • Track Taxes. An invoice contains financial information that makes it easier to track the taxes paid by consumers and owed by the business.
  • Marketing strategies. Businesses can gain a lot of information about their customers by investigating invoices. They can learn more about buying and selling trends to help them create a marketing strategy.

1. Preserve a legal record of the transaction

Perhaps the most important function of an invoice is to provide a legal record of the sale. Invoices contain all the needed information for recording the transaction. It is a record of what was sold when the purchase was made, who made the purchase, and who made the sale.

2. Maintain track of payments and outstanding amounts 

Invoices are invaluable tools when it comes to accounting. Payment tracking is useful for accountants who need to ensure every transaction is recorded in the books properly. Being able to track payments is important for both buyers and sellers. 

3. Evidence of a contract between the buyer and seller

An invoice provides additional legal protection. It provides legal proof of the agreement that was made between the buyer and seller. Invoices show the agreed-upon price. This information helps protect merchants from fraudulent lawsuits.

4. Ensure that the corporation paid the correct amount of taxes.

Companies have to keep good records to ensure they pay the required amount of taxes. Accountants record and maintain sale invoices to report a company’s income. Having an accurate picture of the company’s income ensures the proper amount of taxes is paid.

5. Creates successful marketing tactics

Building an effective marketing campaign means knowing a lot about the typical customer. By analyzing invoices, businesses can obtain information about customers, like their buying patterns, popular products, buying trends, and more. This data helps create effective marketing strategies. 

What are the invoice elements?

Invoices are official business documents. It’s essential that they contain specific information. This eliminates confusion for both buyers and sellers. Here are the basic elements that should be on every invoice.

  • Invoice Number: Each invoice needs a unique number or code. This helps your accounting department organize and manage invoices easier.
  • Invoice Date: State the date the invoice was issued or created. Having the creation date helps clarify when payment is expected.
  • Business Information: Professional invoices should have all your business information. Invoices should have a business logo and the contact information for the business sending them.
  • Customer Information: Include the customer’s name, the contact’s name and title, and contact information. 
  • Description of Products or Services Purchased: An invoice should clearly state the description of each item sold. An itemized description is ideal.
  • Price for Each Product or Service: A business invoice should indicate the quantity of each item sold. Then each price is multiplied by the number of items sold.
  • Subtotal: A subtotal should be calculated for everything listed on the invoice. It should include discounts and taxes that apply.
  • Total Amount Due and the Due Date: Invoices should clearly state the amount due and the date by which it is expected to be paid.

What are the types of invoices?

Here are the five most common types of invoices used by businesses.

Invoice Type Definition Example and Use
Standard Invoice The most common type of invoice is the standard invoice. It’s issued to a client from a business. They include basic contact information, the amount owed, and the services or products purchased. Standard invoices are flexible enough to fit most industries’ billing needs.
Commercial Invoices A commercial invoice is also a business invoice. They are issued by businesses for goods that are provided internationally. Commercial invoices include details of products and sales so custom duties can be calculated for cross-border sales. The difference in a commercial invoice is that it is sent to international customers and required for foreign trade. Along with basic information about the transaction, a commercial invoice includes a declaration of originality, the person conducting the transaction, and special notes.
Timesheet Invoices A timesheet invoice is used for professionals who render services based on time. They are used for invoicing a client based on how many hours they worked on a project. Timesheet invoices are also used by contract employees who are paid hourly.  Freelancers may choose to use a timesheet invoice. Therapists, freelance journalists, psychologists, and technical writers may choose to use a timesheet invoice for their services rendered.
Credit Invoices A credit invoice, or credit memo, is used to record a change in an original invoice. Credit invoices carry a negative total that reverses or cancels the original invoice. Credit invoices have a negative balance. They are used when a business can’t deliver goods or services listed on an invoice, a customer receives damaged goods, products are returned, or there was a pricing error.
Debit Invoices A debit invoice, or debit memo, is useful when the amount charged to a client increases. Debit invoices are often issued by businesses that need to correct the total when they underbilled the client. One example of how debit invoices are used includes a consultant or freelancer who spent more time on a project than what was listed on the original invoice. A debit invoice is sent to make the adjustment.

Who receives an invoice?

Invoices are sent to customers after they have received a product or service. If a customer makes a purchase and pays for it at that time, no invoice is sent. But when they make a purchase but payment is not made at the time, an invoice is sent to the customer.  Invoices are sent from a supplier to whoever their point of contact is in the company. Many times it is the person or department that uses the product or service. It is then passed on to the accounting department that handles accounts payable.  

When is an invoice issued? 

Invoices are issued when a vendor or supplier completes a customer’s order. Orders may be for services, products, or both. For businesses that provide a product or service, an invoice is usually generated shortly after the delivery is made.

How do you make an invoice?

Knowing what information to include on an invoice is one thing; it’s quite another to present the information in a way it is easy to understand. A business needs a client to be able to easily understand and act on the invoice. Here are the steps needed to make an invoice.

  1. Create a Header. An invoice should have a header that includes the date of the invoice and your contact information. You may want to place your contact information under your professional logo. Underneath your contact info, will be the client’s contact information. 
  2. Issue a Unique Invoice Number. Every invoice should have a unique number or identifier in the header. You can use just a unique number, or use a specific identifier. Examples include #Jan2022 or 2022Q1#.
  3. Insert an Itemized Table. A table that itemizes your services or products and their corresponding prices is the heart of invoicing. The table should contain each item, its quantity, rate per unit (or per hour), and the total cost. At the bottom of the table, you’ll add up each line’s sum to calculate the invoice total. This number represents the amount due and should be bolded or highlighted.  Included in the itemized table should be the date or timeframe when each product or service was provided for your client. Include tax details in your total amount due.
  4. Payment Terms. The payment terms on an invoice specify when and how the business expects its customers to pay. The terms should include the invoice issue date, the expected date of payment is expected, and the payment methods the business accepts. Also note on the invoice any penalties imposed for late payments, currencies the business accepts, and any other applicable payment details and conditions. 
  5. Add Footnotes. Most of the time, invoices are self-explanatory as they include the list of services provided, quantities, and prices. But occasionally, they do not show the same picture. For instance, if you are applying a discount to one or more of the line items, clarify the discount in the footnotes. This informs clients that future invoices may be higher for the same non-discounted items. You may also want to include a thank-you note, which is a nice touch.

What kinds of companies use invoices?

Any type of company that provides products or services for sale to their clientele or customers uses invoices. Invoices are the official business method used to ask for payment for services rendered or products sold. Invoicing is used in every type of business, no matter its size. Freelancers to startups small mom-and-pop shops to large corporations use invoicing. Both online companies and brick-and-mortar businesses send invoices to their customers. A freelancer, who is automatically the “sole proprietor,” sends invoices for their projects as well. Virtually anyone who operates a business on any level uses invoices. 

Is there an electronic invoicing system? 

Yes. There are numerous popular electronic invoicing systems available to businesses. Electronic invoicing is an affordable way to use information technology to send a digital alternative to a paper invoice. The process is much more efficient and faster. Electronic invoices are also easier for record keeping.

Is a bill the same as an invoice?

Yes. A bill and an invoice are both documents. They also contain the same basic information. They both contain how much money is owed for the purchase of a service or product. However, the terms differ slightly. The term invoice is typically used to collect money from clients. The term bill is typically used by customers to refer to payments owed to suppliers for services or products they’ve received. Essentially, invoices and bills are the same, but the two terms are used differently by parties involved in the business transaction.

xosotin chelseathông tin chuyển nhượngcâu lạc bộ bóng đá arsenalbóng đá atalantabundesligacầu thủ haalandUEFAevertonxosofutebol ao vivofutemaxmulticanaisonbethttps://bsport.fithttps://onbet88.ooohttps://i9bet.bizhttps://hi88.ooohttps://okvip.athttps://f8bet.athttps://fb88.cashhttps://vn88.cashhttps://shbet.atbóng đá world cupbóng đá inter milantin juventusbenzemala ligaclb leicester cityMUman citymessi lionelsalahnapolineymarpsgronaldoserie atottenhamvalenciaAS ROMALeverkusenac milanmbappenapolinewcastleaston villaliverpoolfa cupreal madridpremier leagueAjaxbao bong da247EPLbarcelonabournemouthaff cupasean footballbên lề sân cỏbáo bóng đá mớibóng đá cúp thế giớitin bóng đá ViệtUEFAbáo bóng đá việt namHuyền thoại bóng đágiải ngoại hạng anhSeagametap chi bong da the gioitin bong da lutrận đấu hôm nayviệt nam bóng đátin nong bong daBóng đá nữthể thao 7m24h bóng đábóng đá hôm naythe thao ngoai hang anhtin nhanh bóng đáphòng thay đồ bóng đábóng đá phủikèo nhà cái onbetbóng đá lu 2thông tin phòng thay đồthe thao vuaapp đánh lô đềdudoanxosoxổ số giải đặc biệthôm nay xổ sốkèo đẹp hôm nayketquaxosokq xskqxsmnsoi cầu ba miềnsoi cau thong kesxkt hôm naythế giới xổ sốxổ số 24hxo.soxoso3mienxo so ba mienxoso dac bietxosodientoanxổ số dự đoánvé số chiều xổxoso ket quaxosokienthietxoso kq hôm nayxoso ktxổ số megaxổ số mới nhất hôm nayxoso truc tiepxoso ViệtSX3MIENxs dự đoánxs mien bac hom nayxs miên namxsmientrungxsmn thu 7con số may mắn hôm nayKQXS 3 miền Bắc Trung Nam Nhanhdự đoán xổ số 3 miềndò vé sốdu doan xo so hom nayket qua xo xoket qua xo so.vntrúng thưởng xo sokq xoso trực tiếpket qua xskqxs 247số miền nams0x0 mienbacxosobamien hôm naysố đẹp hôm naysố đẹp trực tuyếnnuôi số đẹpxo so hom quaxoso ketquaxstruc tiep hom nayxổ số kiến thiết trực tiếpxổ số kq hôm nayso xo kq trực tuyenkết quả xổ số miền bắc trực tiếpxo so miền namxổ số miền nam trực tiếptrực tiếp xổ số hôm nayket wa xsKQ XOSOxoso onlinexo so truc tiep hom nayxsttso mien bac trong ngàyKQXS3Msố so mien bacdu doan xo so onlinedu doan cau loxổ số kenokqxs vnKQXOSOKQXS hôm naytrực tiếp kết quả xổ số ba miềncap lo dep nhat hom naysoi cầu chuẩn hôm nayso ket qua xo soXem kết quả xổ số nhanh nhấtSX3MIENXSMB chủ nhậtKQXSMNkết quả mở giải trực tuyếnGiờ vàng chốt số OnlineĐánh Đề Con Gìdò số miền namdò vé số hôm nayso mo so debach thủ lô đẹp nhất hôm naycầu đề hôm naykết quả xổ số kiến thiết toàn quốccau dep 88xsmb rong bach kimket qua xs 2023dự đoán xổ số hàng ngàyBạch thủ đề miền BắcSoi Cầu MB thần tàisoi cau vip 247soi cầu tốtsoi cầu miễn phísoi cau mb vipxsmb hom nayxs vietlottxsmn hôm naycầu lô đẹpthống kê lô kép xổ số miền Bắcquay thử xsmnxổ số thần tàiQuay thử XSMTxổ số chiều nayxo so mien nam hom nayweb đánh lô đề trực tuyến uy tínKQXS hôm nayxsmb ngày hôm nayXSMT chủ nhậtxổ số Power 6/55KQXS A trúng roycao thủ chốt sốbảng xổ số đặc biệtsoi cầu 247 vipsoi cầu wap 666Soi cầu miễn phí 888 VIPSoi Cau Chuan MBđộc thủ desố miền bắcthần tài cho sốKết quả xổ số thần tàiXem trực tiếp xổ sốXIN SỐ THẦN TÀI THỔ ĐỊACầu lô số đẹplô đẹp vip 24hsoi cầu miễn phí 888xổ số kiến thiết chiều nayXSMN thứ 7 hàng tuầnKết quả Xổ số Hồ Chí Minhnhà cái xổ số Việt NamXổ Số Đại PhátXổ số mới nhất Hôm Nayso xo mb hom nayxxmb88quay thu mbXo so Minh ChinhXS Minh Ngọc trực tiếp hôm nayXSMN 88XSTDxs than taixổ số UY TIN NHẤTxs vietlott 88SOI CẦU SIÊU CHUẨNSoiCauVietlô đẹp hôm nay vipket qua so xo hom naykqxsmb 30 ngàydự đoán xổ số 3 miềnSoi cầu 3 càng chuẩn xácbạch thủ lônuoi lo chuanbắt lô chuẩn theo ngàykq xo-solô 3 càngnuôi lô đề siêu vipcầu Lô Xiên XSMBđề về bao nhiêuSoi cầu x3xổ số kiến thiết ngày hôm nayquay thử xsmttruc tiep kết quả sxmntrực tiếp miền bắckết quả xổ số chấm vnbảng xs đặc biệt năm 2023soi cau xsmbxổ số hà nội hôm naysxmtxsmt hôm nayxs truc tiep mbketqua xo so onlinekqxs onlinexo số hôm nayXS3MTin xs hôm nayxsmn thu2XSMN hom nayxổ số miền bắc trực tiếp hôm naySO XOxsmbsxmn hôm nay188betlink188 xo sosoi cầu vip 88lô tô việtsoi lô việtXS247xs ba miềnchốt lô đẹp nhất hôm naychốt số xsmbCHƠI LÔ TÔsoi cau mn hom naychốt lô chuẩndu doan sxmtdự đoán xổ số onlinerồng bạch kim chốt 3 càng miễn phí hôm naythống kê lô gan miền bắcdàn đề lôCầu Kèo Đặc Biệtchốt cầu may mắnkết quả xổ số miền bắc hômSoi cầu vàng 777thẻ bài onlinedu doan mn 888soi cầu miền nam vipsoi cầu mt vipdàn de hôm nay7 cao thủ chốt sốsoi cau mien phi 7777 cao thủ chốt số nức tiếng3 càng miền bắcrồng bạch kim 777dàn de bất bạion newsddxsmn188betw88w88789bettf88sin88suvipsunwintf88five8812betsv88vn88Top 10 nhà cái uy tínsky88iwinlucky88nhacaisin88oxbetm88vn88w88789betiwinf8betrio66rio66lucky88oxbetvn88188bet789betMay-88five88one88sin88bk88xbetoxbetMU88188BETSV88RIO66ONBET88188betM88M88SV88Jun-68Jun-88one88iwinv9betw388OXBETw388w388onbetonbetonbetonbet88onbet88onbet88onbet88onbetonbetonbetonbetqh88mu88Nhà cái uy tínpog79vp777vp777vipbetvipbetuk88uk88typhu88typhu88tk88tk88sm66sm66me88me888live8live8livesm66me88win798livesm66me88win79pog79pog79vp777vp777uk88uk88tk88tk88luck8luck8kingbet86kingbet86k188k188hr99hr99123b8xbetvnvipbetsv66zbettaisunwin-vntyphu88vn138vwinvwinvi68ee881xbetrio66zbetvn138i9betvipfi88clubcf68onbet88ee88typhu88onbetonbetkhuyenmai12bet-moblie12betmoblietaimienphi247vi68clupcf68clupvipbeti9betqh88onb123onbefsoi cầunổ hũbắn cáđá gàđá gàgame bàicasinosoi cầuxóc đĩagame bàigiải mã giấc mơbầu cuaslot gamecasinonổ hủdàn đềBắn cácasinodàn đềnổ hũtài xỉuslot gamecasinobắn cáđá gàgame bàithể thaogame bàisoi cầukqsssoi cầucờ tướngbắn cágame bàixóc đĩaAG百家乐AG百家乐AG真人AG真人爱游戏华体会华体会im体育kok体育开云体育开云体育开云体育乐鱼体育乐鱼体育欧宝体育ob体育亚博体育亚博体育亚博体育亚博体育亚博体育亚博体育开云体育开云体育棋牌棋牌沙巴体育买球平台新葡京娱乐开云体育mu88qh88