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We’ve always known that almost all businesses make use of invoices. Apparently, though, not all of us understand the reason behind that while others don’t even know what an invoice is.
Basically, an invoice is just another form of a bill and is an important commercial document that is presented by the seller of goods or services to his customers. What makes this document essential is that it has all the necessary information of those goods or services being sold.
Normally, it shows the following:
Thus, showing the transaction that has happened between the customer and the seller. Sending of invoice has no extra charge and both the seller and the buyer will have their own copy as a major proof of transaction.
More than that, invoices are there to serve as business records in case there is a question about an item on a tax return. With this, record keeping will be made accurate, and tracking the business’s source of income and expenses is made easier.
Other uses of invoices involve professionalism and conflict resolution. Professionalism means that if a business strictly follows the rules and regulations, it will reflect on what kind of invoice that business issues. In fact, invoices can create good impressions of a business because it clearly shows a business’s ability to provide a good product or service.
Other than the main contents of an invoice, each country or state may also impose their own regulations on what information must be on an invoice. For example, in Australia, the words ‘tax invoice’ must be stated prominently and the sellers must quote their ABN. Also, as long as the invoice shows customer’s address, an invoice in Australia need not state the ABN of the customer. However, only the businesses who are registered for GST are qualified to issue a standard tax invoice instead of a normal invoice while those who are not registered are deprived of tax invoices issuance and GST credits.