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An invoice or '''bill''' is a Commercial document issued by a Seller to a Buyer , indicating the Product s, quantities and agreed Price s for products or Service s with which the seller has already provided the buyer. An invoice indicates that payment is due from the buyer to the seller, according to the Payment Terms .

From the point of view of a seller, an invoice is a ''sales invoice''. From the point of view of a buyer, an invoice is a ''purchase invoice''. The document indicates the buyer and seller, but the term ''invoice'' indicates money is owed ''or'' owing. In English, the context of the term ''invoice'' is usually used to clarify its meaning, such as "We sent them an invoice" (they owe us money) or "We received an invoice from them" (we owe them money).


BASIC INVOICE


A typical invoice contains Invoice illustration adapted from Meigs and Meigs ''Financial Accounting'' 4th Ed. (McGraw-Hill, 1970), p.190 ISBN 0-07-041534-X
  • The word "invoice"

  • A unique reference number (in case of correspondence about the invoice)

  • Date of the invoice

  • Name and contact details of the seller

  • Tax or company registration details of seller (if relevant)

  • Name and contact details of the buyer

  • Date that the product was sent or delivered

  • Purchase Order number (or similar tracking numbers requested by the buyer to be mentioned on the invoice)

  • Description of the product(s)

  • Unit price(s) of the product(s) (if relevant)

  • Total amount charged (optionally with breakdown of taxes, if relevant)

  • Payment terms (including method of payment, date of payment, and details about charges late payment)


The US Defense Logistics Agency requires an Employer Identification Number on invoices. US Defense Logistics Agency - Required information in invoices


VARIATIONS


There are many different types of invoices:

  • '' Pro Forma '' invoice - In Foreign Trade , a ''pro forma'' invoice is a document that states a commitment from the seller to provide specified goods to the buyer at specific prices. It is often used to declare value for Customs . It is not a true invoice, because the seller does not record a ''pro forma'' invoice as an Accounts Receivable and the buyer does not record a ''pro forma'' invoice as an Accounts Payable . A ''pro forma'' invoice is not issued by the seller until the seller and buyer have agreed to the terms of the Order .


  • Credit memo - If the buyer returns the product, the seller usually issues a credit memo for the same or lower amount than the invoice, and then refunds the money to the buyer, or the buyer can apply that credit memo to another invoice.


  • Debit memo - When a company fails to pay or short-pays an invoice, it is common practice to issue a ''debit memo'' for the Balance and any late fees owed. In function debit memos are identical to invoices.


  • Self-billing invoice - A ''self billing invoice'' is when the buyer issues the invoice to himself (e.g. according to the consumption levels he is taking out of a Vendor Managed Inventory stock).


  • Evaluated receipt settlement (ERS) - ERS is a process of paying for goods and services from a Packing Slip rather than from a separate invoice document. The payee uses data in the packing slip to apply the payments. "In an ERS transaction, the supplier ships goods based upon an Advance Shipping Notice (ASN), and the purchaser, upon receipt, confirms the existence of a corresponding purchase order or contract, verifies the identity and quantity of the goods, and then pays the supplier."http://scm.ncsu.edu/public/facts/facs041014.html


  • Timesheet - Invoices for hourly services such as by .



  • Statement - A periodic customer statement includes opening balance, invoices, payments, credit memos, debit memos, and ending balance for the customer's account during a specified period. A monthly statement can be used as a summary invoice to request a single payment for accrued monthly charges.


  • Progress billing used to obtain partial payment on extended contracts, particularly in the construction industry (see Schedule Of Values )




Utility bills

Bills from Utility companies are based on measured (metered) use of electricity, natural gas or other utilities at a residence or business. Utility bill description for Duke Energy (Ohio, USA) Utility bill description for Bayfield Electric Cooperative (Wisconsin, USA) When an individual or business applies for service from the utility (opens an account), he signs an agreement (contract) to pay for his metered use of the utility.


ELECTRONIC INVOICES

Some invoices are no longer paper-based, but rather transmitted electronically over the Internet. It is still common for electronic remittance or invoicing to be printed in order to maintain paper records. Standards for electronic invoicing varies widely from country to country. Electronic Data Interchange (EDI) standards such as the United Nation's EDIFACT standard include message encoding guidelines for electronic invoices.

But the most common continues to be PDF over email from providers such as NetSuite, Saasu.com, NetAccounts, SimpleBill, Freshboks, Invoice.com and Microsoft Dynamics.

EDIFACT

The United Nations standard for electronic invoices ("INVOIC") includes standard codes for transmitting header information (common to the entire invoice) and codes for transmitting details for each of the line items (products or services). The "INVOIC" standard can also be used to transmit credit and debit memos.http://www.edifactory.de/msginfo.php?s=D05A&m=INVOIC The "IFTMCS" standard is used to transmit freight invoices.http://www.edifactory.de/msginfo.php?s=D05A&m=IFTMCS


PAYMENT FOR INVOICES

Organizations purchasing goods and services usually have a process in place for approving payment on the invoice based on an employee's confirmation that the goods or services have been received. Michigan state Bureau of Transportation Invoice processing US Department of the Navy Commercial Invoice Payments History System Commercial Contracting Guidelines - US Defense Contract Management Agency US Office of Federal Procurement Policy - Best Practices for Contract Administration


SEE ALSO




REFERENCES