In simple terms, an invoice is a document which the buyer receives from the seller, where it is stated what the seller has sold to the buyer. The invoice contains the quantity details and the price of the product sold. So more precisely, how much the buyer owns to the seller? An invoice is not just piece of paper or a sales slip but it is a legal document that saves a company from business errors and risks. It helps to simplify accounting, streamlining your entire invoicing process and improving your cash flow. Nowadays there are even mobile applications that are established which make the process regulation even easier.
The Elements of an Invoice
An invoice must contain invoice number, date of service rendered, date of sending the invoice, contact and the name of the organization or the seller, name and contact of the buyer, terms and condition, the product or service details, tax rates where implacable, cost per unit of the product, a personalized note and total amount owned with currency.
Types of Invoices
- Performa Invoice: a document stating seller’s commitment to sell to the buyer the selected goods and product at a specified time and price.
- Commercial Invoice: a document used for customs declaration of the goods sold which is exported across International borders.
- Credit notes: a document which is issued to the buyer in case the goods are damaged by any chance. This is particularly true in case of goods are taken for a stipulated period particularly in case of rent or mortgage.
- Timesheet Invoice: A document sent to customer in order to charge them for the work done or the services delivered by them on an hourly basis.
- Retainer Invoice: In case the customer makes an advance payment, he or she receives a retainer invoice from the seller. The amount is then deducted from the seller’s final payment or after the completion of the full service.
- Recurring Invoices: they are created and send to the customers at the regular interval, for repeating transaction like fees subscription.
The Need for Invoicing
When an organisation sells goods or services to any individual or organization, invoicing should be properly maintained due to the following reasons
- Record is maintained in an organised basis –
- Payment tracking becomes smooth and easier
- Legal Protection
- Makes filing tax much easier
- Business analytics
The process of Invoicing over the time
Invoice was initially made manually by the accountants present in every organization or firms. But now advanced software have come out, the online invoicing application makes the work of invoicing much faster and smoother. The online invoicing application helps to automate, speed up, manage and regulate the invoicing process so that you get paid timely.
Advantages of using Invoicing software
There are various advantages of using the online invoicing application.
- Helps in reducing the cost of staff in the billing department in an organization.
- Time is saved in following up and chasing late payments.
- The cash flow is improved with faster payment of the invoices.
- Reduces fraud and improves security.
- Less chances of error, as the process is fully automated, thus helps in improving customer relation.
- Helps in creating customised invoices. You can select from the premade templates and tailor made them as per your brands requisites.
- It ensures that the payments are secured and the payments can get automatically collected by you regularly on a recurring basis.
- The software takes care of the payment reminders, while you can sit back and see the process occurring. This saves time to a great extent.
In a nutshell, the invoicing software helps to streamline the accounting and the financial process by automating the major tasks, makes the process much smoother.
Why invoicing has become even more important now?
Now days, it is mandatory to show all your income to the government. If one follows the invoicing system regularly, maintains the records in an organised manner, particularly by online invoicing application then your invoicing can substantiate your reported income in case you are asked to show your income to the audit team.