An invoice is a document that confirms the fact of a sale. Although in many countries it can be issued to an individual, it is more often encountered as confirmation of B2B transactions. The invoice must also specify the items that were sold. Invoices are always issued by the company that sells the goods. Usually, it is done by the employees or owners of the company, but it is important to remember that the person issuing the invoice should be authorized to do so.
What must the invoice contain?
For an invoice to be a legal document, it must contain specific data. At the same time, within the European Union and probably also outside it, the appearance of the document is not specified. It is simply that all information must be readable. Here is a list of necessary elements:
- Word invoice / tax invoice
- Date of the invoice
- Name and the ID number of seller and buyer (VAT number)
- Tax amounts and rates
- Quantity of items/services
- Unit prices, total price
- Currency
- Payment details
How to issue an invoice?
If you have sold a product or service, it's time to issue an invoice. To do this, you can use several options, such as an invoicing program, filling out a free template or creating your own invoice. All you need is an office program such as Microsoft Word or Google Docs. In some countries, the signature of the person issuing the document is also required to reduce the risk of falsification.
Types of invoices
Companies conduct various transactions, so different types of documents are needed. For this purpose, different variants of invoices are used. These include, for example:
- Invoice with tax (VAT), which is a document issued for standard transactions between 2 companies from the same country. It is used most often.
- Prepayment invoice, used in situations where the merchant pays part of the order amount before and part after receiving the goods. It is very useful for orders processed over a long period of time, as it increases the seller's cash flow.
- Simplified invoice. Simplified invoices have been introduced in the European Union. If the value of the transaction is less than 100 euros, it is allowed to issue a receipt containing the identification number of the company that makes the purchase.
- Re-invoicing is mainly encountered in real estate rentals. If a company buys a product only to sell it to another company in a while at the same price (although not always), it can issue re-invoices. Usually these are bills for electricity, water and garbage collection.
- International invoice is a document issued when the contractors are from different countries. It is very important when the seller is a VAT payer, because such invoices are not taxable. VAT is paid by the buyer.
- Invoice without VAT-tax. Some companies for some reason do not pay VAT. The invoices they issue do not contain it, which is quite logical. An invoice without VAT should state why it is not taxed.
- Invoice for an individual in many countries, an individual has the right to request an invoice as proof of sale. It looks very similar to a regular invoice and is basically a substitute for a receipt, but it contains more details.
- Pro forma invoice actually it is not an invoice, because it is not a document according to the law. A pro forma is a draft invoice and can be used as an offer.
- Summary invoice is a solution used in situations where companies work together for a long time and the vendor delivers goods or services several times a month. Instead of issuing an invoice every time, it is possible to simply issue an invoice once in a while.
Invoice template
If you've read the article about budget worksheets, you may remember that Microsoft Office offers many ready-made templates. The same is true for invoices. Some of them are designed for use in Word, while others are designed for Excel. In our opinion, the best free invoice template is "sales invoice- simple blue design". You can even paste your logo!
