An invoice refers to the document issued by a seller to a buyer detailing the goods or services the seller has provided the buyer, the price for those goods and services, and any taxes due. It is also often referred to as a sales invoice. In layman’s terms, an invoice is simply called a bill.
The following other details may be found on a basic invoice:
- The name, contact details (address and phone number) and tax details (business registration number or tax number) of the seller
- A unique invoice/reference number
- The date the product was sold or delivered
- Payment terms (including due dates, method of payment, and penalties to be levied for late payments).
For businesses, it is very important to keep a copy of invoices of all items purchased, to have a way of cross-referencing actual expenses when accounting. It is especially important to be able to furnish copies of invoices during audit, whether internal or external, so as to disprove charges of fraud. A copy of all invoices issued to customers should also be kept for record purposes as provide value-added service to customers in case they lose their copy of their invoice and need to get one for whatever reason.
Nowadays not all invoices are paper-based. Electronic invoices, sent via email, are becoming more popular because it saves time (instantaneous delivery), money (less paper, ink, and postage), and makes it easier to update databases and automate accounting.