Hey Community, and happy Thursday to you! It's never a bad idea to get back to basics from time to time. For example, I found a great write-up in the QuickBooks Resource Center that covers everything you need to know about invoices. Let's take a look, shall we?
Definitions are always a good place to start. An invoice is "a document used to itemize and record a transaction between a vendor and a buyer."
What is the purpose of an invoice? Typically this document is used as a means for the vendor to show the buyer how much they owe them. Some customers may owe a business for a few different product and/or services which means they have open invoices. Businesses can view open invoices to monitor their cash flow and have a good prediction of how much money they can expect to be receiving. In addition to outstanding balance info, invoices also keep track of sell dates and how much they business charges their customers.
Is an invoice a receipt? While very similar in content, the answer to this question is no, they are not the same. The simplest way to note the difference is an invoice is used to collect to collect a payment, and a sales receipt is used to document proof of payment.
What’s the difference between an invoice and a bill? Another good question. Invoices and bills are both used as records of a sale and sent before an actual payment has been made. There is one key difference between the two. When invoices are sent, they seller includes a payment collection date at a later time. On the other hand, a bill is expected to be paid immediately.
What does an invoice include? As mentioned in the article, not all invoices are the same. The look and feel can vary from vendor to vendor. However there is a checklist of details that every invoice should have:
• An invoice number • A date • Business contact info • Descriptions of good and services • Payment terms