Invoice


Invoice

An invoice or bill is a commercial document issued by a seller to the buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. An invoice indicates the buyer must pay the seller, according to the payment terms. The buyer has a maximum amount of days to pay for these goods and is sometimes offered a discount if paid before the due date.

In the rental industry, an invoice must include a specific reference to the duration of the time being billed, so rather than quantity, price and discount the invoicing amount is based on quantity, price, discount and duration. Generally speaking each line of a rental invoice will refer to the actual hours, days, weeks, months, etc. being billed.

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).

Contents

Invoice

I N V O I C E
Company Name
123 Fake Street
Springfield






Invoice No
  Date
Terms
Description Amount Owed:
Invoice Total $

A typical invoice contains[1][2]

  • The word invoice (or Tax Invoice if in Australia and amounts include GST).
  • A unique reference number (in case of correspondence about the invoice)
  • Date of the invoice.
  • Tax payments if relevant (e.g. GST or VAT)
  • Name and contact details of the seller
  • Tax or company registration details of seller (if relevant)[e.g. Australia Business Number (ABN) for Australian businesses.]
  • 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 for late payment)

In countries where wire transfer is the preferred method of settling debts the printed bill will contain the bank account number of the debtor and usually a reference code to be passed along the transaction identifying the payer.

The US Defense Logistics Agency requires an employer identification number on invoices.[3]

The European Union requires a VAT (value added tax) identification number.

Recommendation about invoices used in international trade is also provided by the UNECE Committee on Trade, which involves more detailed description of logistics aspect of merchandise and therefore may be convenient for international logistics and customs procedures.[4]
[[File:[5]]]

Variations

There are 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. In few cases, pro forma invoice is issued for obtaining advance payments from buyer, either for start of production or for security of the goods produced.[6]
  • 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.
  • Commercial invoice - a customs declaration form used in international trade that describes the parties involved in the shipping transaction, the goods being transported, and the value of the goods.[7] It is the primary document used by customs, and must meet specific customs requirements, such as the Harmonized System number and the country of manufacture. It is used to calculate tariffs.
  • 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."[8]
  • 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)
  • Collective Invoicing is also known as monthly invoicing in Japan. Japanese businesses tend to have many orders with small amounts because of the outsourcing system (Keiretsu), or of demands for less inventory control (Kanban). To save the administration work, invoicing is normally processed on monthly basis.
  • Continuation or Recurring Invoicing is standard within the equipment rental industry, including tool rental. A recurring invoice is one generated on a cyclical basis during the lifetime of a rental contract. For example if you rent an excavator from 1 January to 15 April, on a calendar monthly arrears billing cycle, you would expect to receive an invoice at the end of January, another at the end of February, another at the end of March and a final Off-rent invoice would be generated at the point when the asset is returned. The same principle would be adopted if you were invoiced in advance, or if you were invoiced on a specific day of the month.
  • Electronic Invoicing is not necessarily the same as EDI invoicing. Electronic invoicing in its widest sense embraces EDI as well as XML invoice messages as well as other format such as pdf. Historically, other formats such as pdf were not included in the wider definition of an electronic invoice because they were not machine readable and the process benefits of an electronic message could not be achieved. However, as data extraction techniques have evolved and as environmental concerns have begun to dominate the business case for the implementation of electronic invoicing, other formats are now incorporated into the wider definition.

Utility bills

Bills from utility companies are based on measured (metered) use of electricity, natural gas or other utilities at a residence or business.[9][10] 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 vary 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.

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.[11] The "IFTMCS" standard is used to transmit freight invoices.[12]

In the European Union legislation was passed in 2010 in the form of directive 2010/45/EU to facilitate the growth of Electronic Invoicing across all its member states. This legislation caters for varying VAT and inter-country invoicing requirements within the EU, in addition to legislating for the authenticity and integrity of invoices being sent electronically. It is estimated that in 2011 alone roughly 5 million EU businesses will send Electronic Invoices. [13]

Open Application Group Integration Specification (OAGIS) from OAGi

The XML message format for electronic invoices has been used since the inception of XML in 1998. OAGIS has included an invoice since 2001. OAGi has a working relationship with UN/CEFACT where OAGi and its members participate in defining many of the Technology and Methodology specifications. OAGi also includes support for these Technology and Methodology specifications within OAGIS.

UBL

The XML message format for electronic invoices has been used in recent years. There are two standards currently being developed. One is the cross industry invoice under development by the United Nations standards body UNCEFACT and the other is UBL (Universal Business Language) which is issued by [Oasis]http://www.oasis-open.org. Implementations of invoices based on UBL are common, most importantly in the public sector in Denmark as it was the first country where UBL is mandated by law for all the invoices of the public sector. Further implementations are under way in the Scandinavian countries as result of the NES (North European Subset) project http://www.nesubl.eu. Implementations are also underway in Italy, Spain, the Netherlands (UBL 2.0) and with the European Commission itself.

The NES work has been transferred to [CEN]http://www.cen.eu, (the standards body of the European Union) workshop CEN/BII, for public procurement in Europe. The result of that work is a pre-condition for PEPPOL, pan European pilots for public procurement, financed by the European commission. There UBL procurement documents will be implemented in cross border pilots between European countries.

Agreement has been made between UBL and UN/CEFACT for convergence of the two XML messages standards with the objective of merging the two standards into one before end of 2009 including the provision of an upgrade path for implementations started in either standard.

ISDOC

ISDOC is a standard that was developed in the Czech Republic as a universal format for electronic invoices. On 16 October 2008, 14 companies and the Czech government ssigned a declaration to use this format within one year in their products. The main page for the format providing specifications and examples of digitally signed invoices (also invoices with attachments) is here: http://www.isdoc.org .

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.[14][15][16][17] Typically, when paying an invoice, a remittance advice will be sent to the supplier to inform them their invoice has been paid.

Standardization

Invoices are different from receipts. Both Invoices and receipts are ways of tracking purchases of goods and services. In general the content of the invoices can be similar to that of receipts including tracking the amount of the sale, calculating sales tax owed and calculating any discounts applied to the purchase.[18] Invoices differ from receipts in that invoices serve to notify customers of payments owed, whereas receipts serve as proof of completed payment.[19]

See also

References


Wikimedia Foundation. 2010.

Synonyms:
(of articles of merchandise shipped or sold), , ,


Look at other dictionaries:

  • invoice — in·voice / in ˌvȯis/ n 1: an itemized statement furnished to a purchaser by a seller and usu. specifying the price of goods or services and the terms of sale: bill 2: a consignment of merchandise Merriam Webster’s Dictionary of Law. Merriam… …   Law dictionary

  • invoice — ► NOUN ▪ a list of goods or services provided, with a statement of the sum due. ► VERB 1) send an invoice to. 2) send an invoice for (goods or services). ORIGIN originally the plural of obsolete invoy, from French envoyer send …   English terms dictionary

  • Invoice — In voice , n. [F. envois things sent, goods forwarded, pl. of envoi a sending or things sent, fr. envoyer to send; cf. F. lettre d envoi letter of advice of goods forwarded. See {Envoy}.] [1913 Webster] 1. (Com.) A written account of the… …   The Collaborative International Dictionary of English

  • Invoice — In voice , v. t. [imp. & p. p. {Invoiced}; p. pr. & vb. n. {Invoicing}.] To make a written list or account of, as goods to be sent to a consignee; to insert in a priced list; to write or enter in an invoice. [1913 Webster] Goods, wares, and… …   The Collaborative International Dictionary of English

  • invoice — An itemized bill showing goods purchased or services provided together with the charges and terms. An invoice is a bill of sale. (Dictionary of Canadian Bankruptcy Terms) United Glossary of Bankruptcy Terms 2012 …   Glossary of Bankruptcy

  • invoice — [in′vois΄] n. [prob. orig. pl. of ME envoie, a message: see ENVOY1] an itemized list of goods shipped or services rendered, stating quantities, prices, fees, shipping charges, etc.; bill vt. invoiced, invoicing to present an invoice for or to …   English World dictionary

  • Invoice — (engl., spr. ĭnnweus), spezifizierte Warenrechnung, Faktur …   Meyers Großes Konversations-Lexikon

  • Invoice — (engl., spr. ínnweuß), s.v.w. Faktura (s.d.) …   Kleines Konversations-Lexikon

  • invoice — (n.) 1550s, apparently from M.Fr. envois, pl. of envoi dispatch (of goods), lit. a sending, from envoyer to send (see ENVOY (Cf. envoy)). As a verb, 1690s, from the noun …   Etymology dictionary

  • invoice — [n] itemized bill account, bill of sale, check, IOU, note, statement; concepts 329,332 …   New thesaurus

  • invoice — document which shows the customer charges for goods delivered or work done. Glossary of Business Terms Bill written by a seller of goods or services and submitted to a purchaser for payment. Bloomberg Financial Dictionary The document against… …   Financial and business terms


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.