A normal business transaction involves two parties-------- a buyer and a seller. The vendor provides services to the customer and they must produce invoice . This is a transaction, which is the whole point. So, the customer owes cash to the vendor. But how much exactly? And what are they paying for? To answer all these questions the seller sends an invoice to the customer. So, the buyer knows what they owe. They have got a list of items and goods that they are paying for and they know the terms of the transaction. So, they send the money to the Supplier and the transaction is complete.
Why are invoices important?
You know…sellers want to get paid. So, it is important to them that invoices are out as early as possible so they are not waiting around for that cash. The government is also keen on invoices. Most countries charge some form of Sales taxes on taxable goods and services. GST, VAT, State, and Provincial Tax being some of all the taxes laid down by the government.
You know…sellers want to get paid. So, it is important to them that invoices are out as early as possible so they are not waiting around for that cash. The government is also keen on invoices. Most countries charge some form of Sales taxes on taxable goods and services. GST, VAT, State, and Provincial Tax being some of all the taxes laid down by the government.
What do invoices look like?
Invoices are proof that any sale has happened. It should contain the following elements to qualify as a legal document. The elements of a proper invoice are below:
a. The seller should mention the word "INVOICE".
b. There should be a unique invoice number for each invoice, to separate it from the rest.
c. The date should follow the unique Invoice number on which the invoice was raised.
d. Payment terms and conditions should be clearly written on invoice along with due date of the payment
e. The seller must specify his/her name and address so that the customers can reach out in case of any queries.
f. The seller must mention the name of the customer, the billing address.
g. The seller should mention the shipping address.
g. The details of the goods like the name and quantity should be in separate sections.
h. The seller should mention the subtotal, taxes levied on the item, and total invoice amount.
i.j At the end comes to the terms and conditions and the authorized signature.
Conclusion
Your invoices must be appealing. Diligent usage of colors is very crucial. For example, a red unpaid stamp on a reminder invoice will bring more attention to the amount. But, the same on a regular invoice might seem a bit rude. So, the presentation of the invoice becomes more important for any business. Giving a clear description of the product or service offered is another tip that one can keep in mind while working on an invoice. A vague description often leaves a bad impression of your business.
FAQ
Q1. Are bills and invoices the same?
Ans- Bills and invoices are the same things. They relate to the document that is sent to the client to request the payment for the products that the vendor provides.
Q2. When should I invoice?
Ans- You can send the invoice at the time of providing the goods or services.
Q3. Are Invoices and sales receipt the same things?
Ans- The answer is a big NO. But this is confusing because there are a few similarities as both serve as evidence of a transaction and both are produced by the seller and are given to the buyer. But the key difference is that an invoice is a payment request, so it is issued before the payment has been made whereas a receipt is issued after the payment is made.