Invoices serve as reminders about obligations to pay for goods or services. Without such documents, there is a possibility of recipients forgetting the obligations or muddling them up. Such documents are also useful source of data for business enterprises to assess the profits earned in a specific period. Tax authorities also use invoices for assessing the profits and losses of the tax payer. Invoice format, however, differs from one business enterprise to another.
Some invoices are rather simple. They may be in form of a letter, requesting the party to whom such letter is addressed to pay for goods or services bought by them on a specified date. A letterhead of the business enterprise or the person who sold such services or goods is enough to constitute such invoice. Since statute of limitation becomes important in all business transactions, the date of raising such invoice is very important. Even so, the supplier of services or goods is at liberty to reduce the time within which such amount should be paid. Such period of credit should be clearly specified on the invoice as a condition.
Usually, a purchase invoice format includes
a. Name of the business displayed prominently, followed by the address of head office and branch office as the case may be, telephone numbers, email address, website, and fax number;
c. Serial number of invoice for easily tracking the invoice;
d. The word “INVOICE” prominently mentioned on the document and differentiating it with other documents such as purchase estimates;
e. Name of the purchaser along with the purchaser’s address and contact person;
f. Purchase order number and relevant date
g. Columns with details such as serial number, item code, item description, number of units or quantity of the item purchased, cost per unit of item, and a total column containing cost per unit multiplied by quantity or number of the item purchased;
h. A row numerically mentioning the sum total of the amount in the total column, followed by another row mentioning the sum in words;
i. Signature of the person authorized to raise the bill along with their designation
At times there may be discounts offered by the supplier. In such case, the discount is deducted before arriving at the final amount payable by the buyer. Such discounts, however, may be applicable for some items, and not all items listed on the invoice. Therefore, another column for mentioning discounts may have to be included in invoice template. There may also be variations in percentage of discounts. Any invoice format should be able to accommodate such varying data.
Apart from discounts, invoice format includes taxes, which like discounts may differ from item to item. It is not necessary that all goods and services are taxed at the same rate. In addition, there may be taxes collected by local government, State government, and federal or central government. Any invoice format may have to be designed to accommodate such taxes and their variations. Relevant registration numbers may also have to be displayed prominently on invoice format.
Depending upon the type of material being sold, it may also be necessary to display licenses or permit number on the invoice. Therefore, relevant invoice format should have a column or row showing such numbers as well. An example of this would be explosives selling business.
Many business enterprises collect shipping, loading, postage and handling charges, or transportation charges. Alternately, buyer may be responsible for such charges. Relevant information is provided under F.O.B. column in the invoice templates. Therefore, invoice format may include shipping details such as date of shipping, and the name of shipping business. It is also important to include evidence of purchase order, and the name of the authorized person who placed the order for material since any wrong shipment can prove to be expensive for the supplier.
Buyers may be asked to pay some monies upfront, depending upon the type of merchandise and its costs. Alternately, the buyer may be a regular client who maintains some balance with such supplier. In such cases, invoice is for net amount or may again show the balance being carried forward. However, any such invoice should provide details such as actual invoice amount less available balance or available balance less invoice amount.
As can be seen from above, there can be many details that may have to be included in one invoice document. However, the size of the paper does not permit accommodation of as many columns. Therefore, some of the information is provided in rows, whereas other information is provided in supplementary pages that form an integral part of such invoices. However, not every business enterprise requires such complex invoice formats. Therefore, selecting the invoice format that is appropriate for the business is important.
Formerly, a copy of each such invoice was prepared manually by using a carbon sheet in between two differently colored printed invoice sheets. Effectively, there were duplicates of all such pages. The work became even more laborious when the sales were through a branch office. Such branch then had to send a copy of relevant invoices to head office as well. Now, invoices can be generated by accounting software. Such electronic records are more accurate and easier to access from different locations. It is also easier to send such invoices to the parties through electronic mails.