What Is Invoice, Its Type & Benefits Of Invoice

What is the invoice? Invoice is a document issued by the seller to the buyer (or in this case to the customer) according to the agreement stated in the Purchase Order (PO). Or better known as an order letter issued after booking or order occurs between the seller and the buyer. The invoice contains details of each item or product offered at a price according to the PO agreement.

Additional explanation about invoice

The invoice is a list of shipments of goods that are accompanied by a description of the name, amount, and price to be paid by the customer. An invoice can also be interpreted as a calculation of credit sales provided by sellers to consumers.

All those involved in the business whether trading products, services, or the other must require an invoice. In an invoice service company commonly called a Notice or receipt. This invoice is proof of the transaction between the seller and the consumer.

How to make an invoice

Here are some things that must be considered in making an Invoice, including:

  • Invoice is made according to the goods that have been sold or received by consumers. This is to minimize the rejection transaction carried out by consumers when the goods that have been sent have been received. Therefore this invoice is made after the shipping process is signed by the consumer.
  • One transaction made by consumers can be written in one transaction (one time Do / SJ). And transactions can also be written in stages (several times Do / SJ). Some companies set for every payment for each transaction that occurs, then the payment will be made after the order process has been carried out.

And if there are several transactions, an invoice will be made as a whole. In this case, a detailed recording of the purchase details is needed both for consumers and sellers.

Habit in making invoices will help business people to monitor accounts receivable books because with the invoice will be able to monitor the company’s receivables. In the internal accounting system control procedures, the manual method is recommended to create invoices with the serial numbers printed.

But lately many business people who make invoices or invoices with a computerized system. The advantage is that when printing sequences with a computerized system, double sequence numbers will not be printed.

When using serial numbers manually, printing multiple numbers will be very easy to occur so that it can cause losses to the company. An example of making an invoice must include:

  • Billing purpose (consumer or customer)
  • Identity of the collector (the company or institution that is responsible)
  • Invoice number or order letter-number associated with the invoice.
  • List of items purchased by consumers.
  • Tax amount or payment amount.
  • The purpose of payment is in the form of company and bank account details.

Types of Invoice

An invoice can be divided into several types. Here are the types of invoice or invoices

Ordinary Invoice

This kind of invoice is most commonly used in transactions that are modest in the sale and purchase transactions. Invoice is usually given to the general and simple transaction system.

Fill in an invoice or an ordinary invoice is very simple. Only contains item details, quantity, item price, and total price.

Proforma Invoice

This is a type of temporary invoice that is provided before the overall delivery of goods. The point is that this invoice is used as a temporary replacement invoice because the goods received by the buyer are sent in a gradual or separate manner.

This proforma invoice will be used by the buyer when making payment. This is done because the buyer buys goods based on the Proforma Invoice, but the goods have not been received as a whole.

Invoice or proforma invoice it will be replaced with ordinary invoices and invoices intact when all the goods ordered have been received in full.

Consular Invoice

An invoice that is used in international trade or export and import activities. Before being submitted to the recipient, this invoice must obtain legalization which will then be authorized by the representative of the importing country.

In the consular invoice, there must be endorsement and approval of the importing country representative or trade attaché (expert), the consular office, and the Embassy of the importing country in the exporting country.

Tips for Obtaining Invoice Payments quickly

As a seller, you certainly need payments made quickly in order to save the company from the trouble of handling delayed payments due to unclear bills. Here are tips for making invoice payments quickly

Easy to understand

Make sure if you make an invoice that is simple and easy for customers to understand. Include the name of the item or service by writing the full name of the product making it easier for customers to find out what goods and services they ordered.

Also place a company logo so that it can help customers identify your business, besides adding a logo can make your company look more professional.

Send it to the Right Person

You must ensure that the invoice you send reaches the right person. Some common mistakes that occur, is sending invoices to many people. This will only make the recipient assume there will be someone else who will take care of the payment.

Give Early Payment Limits

Try to advance the payment threshold on the invoice. This can be done if your company has provided good service.

Send Invoice ASAP

Sending an invoice as soon as possible will encourage payment faster. In addition, it will also make it easier for customers to remember the service you have provided.

Offer a Flexible Payment Method

Provide an easy payment method so your customers are happy and helped when making payments. Always remember that ease and efficiency is everything in the business world.

Imposing Fines for Late Payment

Nothing wrong if you apply with late payment. By adding late fees, you have stressed an important element of the bill.

Send Payment Reminder

If the payment date is due and you haven’t received the payment, then you should send a payment reminder that can help remind customers of the bills they haven’t paid yet.

Those are some ins and outs of invoices. You who are involved in the business world, especially SMEs and SMEs must know the meaning and important functions of the invoice so that nothing unexpected happens.

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