What is an Invoice?
In simple terms, an invoice is a bill – a document containing the amount of payment that a buyer owes to a seller in lieu of products or services (or combination of both) being received by him.
Thus, an invoice is by definition non-negotiable.
The key difference between an invoice and a receipt is the former is a request for payment, while the latter refers to acknowledge of payment.
While the seller prepares the invoice and sends it to the buyer, both parties have different names for this term.
The seller refers to it a Sales invoice, whereas, the buyer calls it a Purchase invoice. In effect, they are the same document. The difference is from the perspective of filing purposes in the pertinent accountant department.
A purchase invoice goes to your account payable (liabilities), whereas the sales invoice goes to your account receivable (assets).
The Anatomy of an Invoice
There are multiple types of invoices, but all of them contain same sections (even though they may be in various places).
These Sections include:
- The name and contact information of the seller- You should prominently express who you are as a seller, including your logo, address, email and phone number.
- The word ‘invoice’- You should make the word invoice clearly written so that the buyer (your customer) will have no doubt as to what the document is all about.
- A unique invoicing number with a date - Your invoice number needs to be uniquely identifiable with your business. Each invoicing number must be unique as well as sequential, which means only one particular number corresponds to a particular invoice.
You can choose to create it as number only (0861) or alpha-numeric (SZP0092). It is always recommended to include the date of the invoice for record- keeping and tax purposes.
- The name and contact information of the buyer- Your client’s details should also be clearly expressed and written in such a way that the information can be properly seen through the window/opening of envelopes.
- A description of the products(s) of service(s) – Always try to put clear and accurate descriptions of your products or services. Each item has to be put in a separate line.
- The date that the goods or services were provided- Make sure to mention the when the product or service was provided to avoid any ambiguity.
- The quantity of goods sold- Clearly mention how many goods were sold- you need to do it for each product or service listed.
- The unit price of the product(s) or service(s)- For each item including the unit price, even if they are all the same price.
- The total amount being charged- Mention the total amount including taxes. It’s better if you put it a different size font.
- The due date for the payment- You should always include a due date for your invoices. Anything from 15 days to 30 Days is considered as standard.
Other important parts of an invoice
Apart from the basic sections or features, you can include other sections in your invoice. Such as, payment terms that tells the due date for payment, additional charges for overdue payment; and payment methods.
Certain invoices my also contain some necessary taxes (such as GST, VAT or other local taxes), credit terms, discounts, and the tax or registered company details.
Now days e-invoicing is also becoming common, it includes the bank account number of the seller along with a reference code for online payments or wire transfers.
What do you mean by Shipping?
To put simply, shipping is the process of transporting an item/product from one place to another, or from one person to another. It can be defined from two perspectives. The first is by the size of the package. For example, smaller objects like shoes, clothes, and accessories can be packaged and sent to the customer using a postal service. The second definition, on the other hand, is from consumers’ perspective. They can understand the shipping date to be the day on which items were sent out and began their way to them.
What is Manifest?
It refers to a transport document serving as a tally-sheet, which provides a detailed summary of all bills of lading (or air waybills) issued by a carrier (or its agent) for a specific journey of a specific vessel or vehicle. For cargo carrying vessels or vehicles, a manifest lists its consignor, consignee, number, origin, destination, value, and other important information essentially used by customs officials. The place from where the vessel or vehicle carries passengers, it lists their names, port of embarkation, port of disembarkation, etc., essentially used by the immigration authorities.