What is an Accounting Invoice?
An invoice is a legally binding document sent by a supplier to the buyer that requests payment after the products or services have been provided. It is an essential document in the business' accounting and bookkeeping. In some areas of the world, invoices are known as a bill. The most common type of invoice are a commercial invoice, proforma invoice, timesheet invoice, recurring invoice, and progress invoicing.
How to Create an Accounting Invoice?
Historically, invoices are printed to paper; however, due to man's innovative mind, invoices can now be sent via email. Electronic invoicing or e-invoicing allows easier and faster sorting and searching for specific dates or particular transactions. Zion Market Research published a report stating that the global e-invoicing market was valued approximately USD 4, 649 million in 2018 and is expected to reach USD 20, 529 million by 2026. Regardless of the previously mentioned statistical data, printed invoices are still widely used across the globe. Everyone in the industry should learn how invoices work, as well as how to make one—whether electronic or printed—since invoices are great transaction tools.
The following are a few guidelines that you can use in creating an effective invoice:
1. Include an Invoice Number, Invoice Date, and Due Date
These three details might be the smallest detail that you can find in an invoice; however, these details play a significant role in invoicing. Sales invoices should have a unique invoice number and date since it will help you track the invoices that you have sent to the buyer. Just refrain from repeating the invoice number because it might lead to confusion. Moreover, the supplier should also indicate the agreed due date to make the buyer aware of the payment deadline.
2. Provide the Information of Both Parties
The information of both parties should also be indicated in all invoices. This information includes the name/company name, business address, contact number, and the email address of the supplier and the purchaser. Indicating the purchaser's information allows the supplier to track their payments and whereabouts, especially if the invoice has long been due.
3. Put a Description about the Purchased Goods
You have to provide the necessary details of the rendered service or the purchased item in your invoice. Being specific and detailed is the key to creating an effective invoice. Providing a detailed description of the product or service is also your way of being transparent to your client. If the purchased items are designer bags, you can specify the brand, quality, quantity, size, color, unit price, total purchase, or the tax.
4. Terms of Payment
During the first stage of the transaction, you have to ask your client the process that they want and how they are supposed to pay you. At the bottom part of your invoice, you have to outline the payment terms, as well as any information relating to discounts, early payment details, and finance charges for late payments. It is also in this part where you present the date of sale, price of sale, and the method of payment.