What is an Invoice?
Read this information before creating your invoice
An invoice is a document which is send by the seller to the buyer. When we buy goods or services from vendors, we have to present them with a proof of purchase to get paid for. And this is when the invoices come in handy. Formatting and sending invoices can sound daunting but even than no one can deny their significance.
Why to Use?invoices serve various purpose. They are not only important for receiving payments, they are also useful for the legal protection of both the parties. People who are more linked with business laws and audit can understand the importance of maintaining invoices. An invoice includes all the necessary elements of a financial transaction. During our relationship of buying and selling, the amounts involved will include tax and any trade discounts too. If we do not have an invoice, we will never know the breakup of the payment.
Basic ComponentsInvoices help us to pay and reclaim our tax from the tax authorities. In a complex business structure, accountants monitor the tax using these invoices. The following are the basic components of any invoice:
- Name and contact of seller.
- Name and contact of buyer.
- Product details.
- Cost per item.
- Total amount due.
- Due date of the payment.
How does it Help?Invoices make it easy to get paid or receive your payment. Without an invoice, it can be hard for a company to keep a track of any payables. Invoices can aid the legal process against a payment. An invoice is an implied consent from the buyer to pay for the goods. In case of a default payment, the legal team requires any overdue invoices to file a law suit. The company on the other hand, also needs to maintain the invoices to prove that they have received a payment or send a payment for the goods purchased. Even when everything is working just fine, maintaining invoices is a legal regulation that every company must follow. Public or private companies get audited at least once in a year. Record keeping can be useful for the auditors to track the money trail.