QuickBooks makes your life easy by helping you to create Invoices and Delivery Challans and also there is a provision to merge these in QuickBooks. QuickBooks also allows you to create Bills, and Purchase Order once you log in to the product and click + New button from the left navigation bar.
Do you know what is an invoice and delivery challan and when to use this and what are the differences between the two? Learn it here, it’s simple and straightforward.
What is an Invoice?
- An Invoice (also called as “Sales Invoice”) is a financial and legal document that is issued by the seller to a buyer and it contains the following fields:
- Date of the invoice
- Customer and Supplier’s full name and address
- GSTIN details of both if he/she is a GST registered
- Supplier’s company logo
- Name of the customer (first name/display name) to whom the invoice will be raised
- All the details of product and services sold with quantity, description, actual price to be paid by the customer, tax % applied, additional notes, attachments if any
- Terms of payment (net 30 days, 45 days and 60 days, 90 days as supplier agrees with a customer) – this means within the specified day, payment needs to be made.
- Use inventory coding if your product/service has a code to track the status
- Mention the discount if that is applied for any specific service given to the customer or deposit
- Mention any deposited customer has already made to the supplier
- Payment method – The supplier may provide a payment method to the customer as cash, cheque, Bank transfer, etc.
- Payment terms and conditions should be clearly mentioned
- Shipping terms if any
Note: Each product or service will be mentioned in the one-line item.
An invoice can be prepared before or after the said product/service has been delivered by the supplier to customers (most of the time it is created post-delivery of product/service). The frequency of an invoice could be monthly, quarterly etc. as agreed by both parties. It creates an obligation from the customer’s side to pay to suppliers timely by creating an account receivable.
Invoice is an important part of the bookkeeping and accounting system as it records sales transactions
To raise the invoice, you need business management and accounting software. The invoice can be shared with the customer by email/fax/mail.
When customer payment is done, the invoice number should be mentioned on the sales receipt, and also matched to the sales receipt on the business management and accounting software (to ensure that invoice has been paid). The payment is taken from the outstanding amount of the customer’s accounts receivable account.
What is Delivery Challan?
A Delivery Challan is a legal and formal document (used for accounting and business management purposes) that is created when goods are being transported from one place to another which may or may not result in sales. It contains the following information:
- customer and supplier’s name, address
- date when the shipment has been sent
- the description of the quantity of the goods and items being delivered
- item code
- additional notes if any
It is sent along with the shipment of products/goods. The customer acknowledges the delivery of goods, by accepting the delivery challan.
The difference between the Delivery Challan and Invoice
Here are the differences between the Delivery Challan and Invoice:
- Invoice is the legal proof of the ownership of goods/service with all the risks, liabilities it carries along with it; it shows the actual value of the goods
- Delivery challan shows that the customer has acknowledged the receipt of goods, but does not show their legal responsibilities or ownership.
- It is mostly used during the transportation of good from one place to another mentioning the description, condition and quantity of the goods, but it may not result in a sale;
- It will not show the actual value of the goods; delivery challan can contain the value of the goods mentioned on it, but will not include the tax charged to customers.
Sometimes invoice and delivery challan can be merged to show as “Tax invoice cum delivery challan”.
The Difference Between Invoice and Purchase Order
- Invoice is generally created after the delivery of products and services whereas the Purchase Order is created before the delivery of products and services.
- The purchase order is a commercial agreement between the customer and supplier where the customer mentions the details of the product/service that will be delivered by the supplier, purchase order number that will be used, description of the product, quantity and price card of the supplier per product or service. This is used to control the price of the supplier and identify the best supplier from the market to ensure value for money and quality
The Difference Between Invoice and Bills
Bills are usually created by the supplier with an immediate need of payment from the customer i.e. it’s a request for payment. It is okay to receive a bill without an invoice. Bill is made from the customer’s standpoint whereas Invoice is created by the supplier to a customer including product/ services delivered with its details, quantity, the total amount that the supplier expects customers to pay as per timeline agreed.
Below are the examples of Invoices, Delivery Challan, Bills, and Purchase Order created from QuickBooks with a few clicks:
Delivery Challan in QuickBooks (Click ‘Sales’ from left navigation bar of QuickBooks, go to ‘Invoices’ from the top tab, and then select any invoice. In the Invoice screen, click Print or Preview from the bottom menu options and select “Print Delivery Challan”)
Purchase Order in QuickBooks: (Click +New from left navigation bar of QuickBooks and select ‘Purchase Order’)
Bill first part in QuickBooks (Click + New from left navigation bar of QuickBooks once you log in and click ‘Purchase Bills’)