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The Definition and Purpose of Sales Invoice

In financial accounting, a sales invoice (or invoice) is a document that a company uses to communicate to clients about the amounts due in exchange for goods and services sold. Invoices help businesses get paid and provide legal protection for both sellers and buyers.

As a service or product provider, you need to prepare a sales invoice whenever you need to request payment from your customer. Usually, invoices are sent twice; before the customer’s request is processed and after the request is fulfilled. However, some sellers prefer to send their invoices either at the beginning or the end of the transaction, depending on the payment policies applied in their companies. Otherwise, you also can improve your selling by using CRM-Leads. This software will help you to boost your sales team productivity, so your selling activities will be done effectively.

Although you can find invoices daily, there are still many people who often mistake them for receipts. In this article, we will explain everything you need to know about sales invoices.

Related article: Quotation, A Must Known Thing for a B2B Business Owner!

sales invoice

Table of Content

Types of Sales Invoices

There are at least four types of invoices that are generally used for transaction purposes.

Standard Invoice

The Definition and Purpose of Sales Invoice
An example of a standard invoice

A standard invoice is the simplest type of invoice. The company can apply it in any sale transaction. It should include the reference number, delivery date, due date, seller’s name, contact information, list of products or services transacted, total price, and payment method.

Pro-forma invoice

Pro Forma Invoice
An example of a proforma invoice

A Pro-forma invoice is a seller submitting that invoice before the goods or services are buyers get. The purpose of a Pro-forma invoice is not to ask for payment right away but to inform the buyer or the customer about the fee that the customer must pay after they receive the products or services they ordered.

Recurring Invoice

Recurring Invoice
EQUIP E-Invoicing

Suppliers or merchants use recurring invoices to charge customers for goods or services regularly. These invoices are generally provider submit monthly, and popularly service providers use regular customers, such as internet service, TV, and telecommunications service providers. 

Commercial Invoice

Sales Invoice Commercial
  A standard template of commercial invoice

Unlike the daily invoices that we usually encounter, commercial invoices are special invoices designed for documentation in international trade, such as shipping machine parts from one country to another. These invoices are used for customs valuation ​​when products cross international borders. To switch your documents to a paperless system, you can use a document management system. This system also guarantees your document safety with layered encryption so you no need to worry about your company private data.

Related article: Understanding Invoicing Software and Its Benefit for Your Company

The Purpose of Sales Invoice

The Definition and Purpose of Sales InvoiceSome functions of a sales invoice include:

  1. For a written evidence related to the quantity and price of goods
  2. As information regarding the value of bills that customers must pay immediately
  3. As proof that the taxable goods that customers receive are following their requests and the customer can use the invoice to file a complaint
  4. For a reference document, when the goods or services listed will the company sell to other parties.
  5. As a tool to track what company has sell, when the transaction has taken place, and how much involves money
  6. As avalid evidence for tax reporting
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download skema harga software erp

The Components of a Successful Sales Invoice

Each type of invoice has its own purpose. But, usually, invoices contain some of the same important components. Make sure your invoices include the following information:

a) Company Information

You must include the company’s legal name, logo, and address in the invoice.

b) Customer Information

The customer’s name that matches their identity card must you write entirely.

c) Invoice Number

An invoice number has to the company include in an invoice to distinguish one transaction from another.

d) Invoice Date

This part shows the date when the invoice is sent, so merchants can record their daily journals based on their sales invoices.

e) Transaction Details

A detailed description of the goods or services listed, consisting of quantities, codes and names of goods or services, as well as unit prices, discounts, and total prices.

f) Total Amount Due

The total amount due includes the subtotal price of each product, the taxes collected, and the total price that the customer must pay.

g) Payment Terms

Last but not least, a sales invoice must also cover the terms and conditions of payment that the customer must fulfill, including the due date and payment method.

Related article : The Difference Between Purchase Order and Invoice

How to Create Sales Invoices Instantly

Sales invoices play an important role in the sustainability of your business. Late-paid invoices can stop your business income and this indicates unhealthy cash flow. Therefore, it’s important for you to ensure that each invoice is paid on time.

Conclusion

To make it easier for you to create and manage your invoices, consider using HashMicro’s E-Invoicing software. With this software, you can make various types of invoices, customize them, and send them automatically. You can also set up reminders to avoid late payments.

sales invoice

EQUIP E-Invoicing can integrate with an accounting system so that you can also monitor your income and cash flow through one system. Visit our website for complete information about our E-Invoicing software.

Interest in getting savvy tips for improving your business efficiency?

Kanya
Kanya
I'm now working as an intern in the content writing department, and I've written many articles that deal with various technological systems.

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