Invoice is a billing document under which billing is done for a single transaction and it contains itemized list of goods and services bought in that transaction. It is different from a statement which lists all the invoices issued on account of a particular customer for a particular period.
Essentially every perfect invoice consists of following elements: An invoice date, An invoice number, Itemized list of all the goods and services purchased, Sales tax and shipping amounts (if any applicable), Total due amount, Remittance address etc. All these elements are vital for preparation of an invoice. From the point of view of buyer, it is purchase invoice and from that of seller, it is sales invoice. Though the document indicates buyer and seller but it actually is indicating the amount of money being owed.
Typically every invoice contains the following elements:
• Title “Invoice” (tax invoice in Australia and includes GST).
• Unique number for reference.
• Date of issuing invoice.
• Relevant tax payments i.e. GST and VAT.
• Name, details and contact address of the seller.
• Details of company registration of the seller (if any relevant).
• Name, details and contact address of the buyer.
• Date on which the good or service was sold or delivered.
• Purchase order number(example- tracking numbers requested by the buyer)
• Description of the goods or services rendered.
• Unit price of the good or service.
• Total amount owed or charged (with breakdown of relevant taxes).
• Terms of payment (cash or credit card, including method and date of payment and details of any late payment).
• Any other terms and conditions.
There are different kinds of invoices like credit memo, debit memo, commercial invoice, self-billing invoice, evaluated receipt settlement, timesheet, statement, progress billing etc. Today the sellers follow Online Invoicing under which all the credentials are recorded on computer and send electronically to the computer of the client. Thus all the billing is done over internet and payment is also received electronically.
VAT Details: If someone is registered for VAT, then whether he is sole trader or limited company, it is essential to put all the relevant information connected with sales on invoice. Every individual sale results in a separate and unique invoice. Therefore, it is considered best to set records and invoices correctly for VAT every time business starts. You can also prepare pro-forma invoice and send it to the buyer so as to get his or her confirmation regarding the terms of contract in consideration. This is said to be a polite reminder to the buyer to make him realize that he is due for payment. You can also add any extra information, if very vital.