What is invoice?
An invoice is a document for commercial purposes that list down the dealings between a seller and a buyer.
An invoice indicates the transaction details such as the number of items purchased, cost of services or goods, date of sale, the names of the seller and buyer, the invoice number that is unique, and sometimes even tax information.
When a buyer purchases through credit, and then the invoice will detail the terms of the deal and indicate the payment method.
The invoice is also referred to as â€œstatementâ€ â€œbillâ€ or sales invoiceâ€.
Why the need for invoice?
Invoices are needed for tracking the sales for inventory purposes as well as tax and accounting reasons. Invoices are used to track the number of sales since firms also cross check their physical inventory versus their invoices. Accountants also check the invoices.
An invoice is also a legal document as most governments require that business establishments issue invoices to their clients. Businesses, usually, have some tax information in their invoices as prescribed by law. Failure to give out invoices by the business establishment is punishable by law in most countries.
Consumers may also benefit from keeping the invoices of their purchases. This is especially true when the consumers need to return a product or an item.
Invoice versus receipt
Many individuals also get confused over the difference of an invoice and a receipt. An invoice is not a receipt since a receipt is an acknowledgement of the payment received for a product or service.
The invoice on the other hand documents the all purchases of services or products regardless whether payment has been received for the goods or services or not. An invoice, after all, is issued even if the services or products were purchased through credit.