Invoice

An invoice is a financial document with a written request for payment where payment is made at a later date. It is a primary document.

Look Out For

• Full address of the customer.
• Full address of the supplier.
• Delivery address if different from the customer address.
• An invoice ID so this document can be referred to.
• The account number of the customer.
• The purchase order number (if supplied) to help the customer locate the authorisation for the order.
• The product codes of the items order.
• The issue date - this is important with credit orders as the terms (how long a customer has to pay) e.g. twenty-eight days is calculated from this date. This date is also used for the calculation of Value Added Tax (VAT).
• An itemised list of the goods supplied, this can include columns for:
  • Product code
  • Description
  • Quantity
  • Price - for one item, we need to multiply this by the quantity to get the row total.
  • Unit
  • Total
  • Discount percentage - this could be for example a trade discount for regular customers, a bulk discount for buying large quantities of a single product or a prompt payment discount for paying quickly (though this is usually applied after an invoice is issued). Discounts are usually expressed as percentages.
  • Net total - this is the amount before any discounts are taken off..
• Goods total - the total amount due to the supplier for all items on the invoice.
• Value Added Tax (VAT) - this is a UK sales tax which is currently 20% of the total price of the invoice. It can be changed at any time by the government.
• Total - this is the goods total plus the VAT total (i.e. it's the total amount the customer has to pay the supplier.

Terms

Some invoices will state specific terms which relate to the invoice using standard accounting language, you may commonly see:

• Net monthly - payment should be made within a month of the invoice date.
• Carriage paid - if this is used it means the delivery cost is included in the price of the items rather than as an additional cost.
• E & OE - this stands for Errors and Omissions Excepted - in English this means if the supplier makes a mistake on the invoice they have the right to correct it and expect the correct amount as payment.
• Prompt Payment Discount - this is a discount given if payment is made early (it is sometimes also called a Settlement Discount or Cash Discount.

Invoice Authorisation

Once raised invoices should be authorised to check for errors and confirmation that an invoice is OK to be sent.

Checks can include things like the order not putting the customer over their agreed credit limit (if it does the account could be put on hold or payment in cash requested.)

Things also being checked are the amounts being charged, correct customer is being invoiced and the right goods being invoiced.