invoice

An invoice is a formal commercial document issued by a seller to a buyer that itemizes goods or services supplied, quantities, unit prices, taxes, total amount due, and payment terms. It serves as a request for payment and as a financial record for both parties.

Typical components include seller and buyer details, an invoice number and date, descriptions of items or services, quantities, unit prices, any discounts, subtotals, applicable taxes, total amount, payment terms (for example, net 30), due date, currency, and payment instructions. Invoices may be generated for one-time orders or recurring billing and can be standard invoices, pro forma invoices (a preliminary quote), or credit/debit memos for adjustments.

Delivery and processing: invoices are issued after goods or services are provided and delivered through mail, email, or electronic invoicing systems. The payer reconciles the invoice with purchase orders and receipts, and payments may be made by bank transfer, card, or other methods. Late payment terms may specify penalties or interest.

Regulatory and accounting considerations: invoices support tax reporting (such as VAT or GST), revenue recognition, and audit trails. Many jurisdictions require certain data to be recorded and retained for several years. Businesses often implement internal controls to prevent fraud and ensure accuracy, including unique invoice numbering and secure archiving.

Electronic invoicing and standards: e-invoicing involves transmitting invoices digitally, sometimes via standardized formats (e.g., XML, UBL) or networks (Peppol). Electronic invoices improve speed and accuracy and are increasingly adopted in cross-border trade, where currency and tax rules may vary.