What is an invoice? The definition of this term means a transport document sent to the buyer, which indicates the quantity and value of goods or services that have been provided by the seller. It states what must be paid by the buyer in accordance with the seller’s payment terms. Payment terms usually define the period of time within which the buyer must send payment to the seller for the goods and/or services he has purchased.

Types of invoices

List of different types:

  1. Commercial.
    A commercial document is a special invoice designed to document any foreign trade. It is used for customs declaration when goods cross international borders. It may contain some special notes and comments.
  2. Proforma.
    Compiled for free shipments, or already partially paid for.

So, although a pro forma and a commercial invoice may look very similar, there are three main differences between the two documents:

  • When they are released.
  • What do they include?
  • How they are used.

The pro forma is used by the buyer and seller to agree on the price and terms of sale. It can also be used by the buyer to obtain any necessary import permits, overcome any potential restrictions, and arrange a letter of credit or other payment process. Commercial is not only a tool for collecting payments, it is also used by customs authorities to determine applicable duties, taxes and other import charges and ensure compliance with export requirements. It also provides the necessary information to move the goods from the seller to the buyer.

What information is contained in the invoice?

An invoice contains a detailed statement of the products or services and a collection of other information that may vary slightly depending on the requirements of the country in which the invoice is issued and the type of product or service being sold. The invoice shows the payment that the buyer owes to the seller. From a seller’s perspective, an invoice for the sale of goods and/or services is called a sales document. From the buyer’s point of view, an invoice for the cost of goods and/or services provided is called a purchase document. Typically an invoice will include the following items of information in order to be considered a legal invoice:

  1. Unique reference number: cargo transportation document number.
  2. Date of dispatch or delivery of goods (or date of provision of services).
  3. Date the document was sent.
  4. Seller’s contact information and name.
  5. Buyer’s name and contact information.
  6. Payment terms (which explain the method of payment, when the amount is due, any cash discount details, late fees, etc.).
  7. A line with a detailed description of the product/service.
  8. Unit cost (if applicable).
  9. Total amount owed.

“Invoice” – what is it? This is the basis of the sales process. This is the main document that serves as an invoice for services or products provided by your business. A properly executed invoice is a legal document that provides a binding agreement. Not only are they important for tracking sales and payments, but they can also be used when a payment is late or missing and is followed by more formal action. 

Filling example (sample)

You need to start with the basic details that will need to be provided so that clients can pay the correct amount on time. Here is what you will need to indicate on the form:

  1. Contact information (transcript) of the company, including its name, address, telephone number and email address.
  2. Client contact details; the recipient and the customer may be different people and this must be taken into account.
  3. A unique invoice number so you can easily refer to specific dates when communicating with clients or when keeping records for your business.
  4. A detailed list of the services provided and their value, including all relevant details such as the number of hours worked, hourly wages and a subtotal for each item. Displaying this information in a grid or table format can help.
  5. Payment terms, including the payment methods the company accepts and any late fees that will be charged to customers for missed payments.
  6. The invoice due date is clearly displayed and highlighted on the page.
  7. The total amount owed is in bold text that stands out on the page.
What is an invoice in simple words?