Preparing invoices is a process which many businesses will need to do, for their own and their customer’s records. Invoices vary in their content and style and there is no set standard.
An invoice is a document which is sent by a business to its customers for goods or services supplied. It states the amount to be paid and the due date. An invoice is not the same as a receipt, which is an acknowlegement of payment.
The customer should check the invoice against any purchase orders and delivery notes and the calculations on the invoice should be agreed.
An invoice can either be issued on paper or electronically.
When most retail sales are made, the customer cannot recover the VAT charged and the retailer is not required to provide an invoice, unless the customer asks for one.
However, if your business is VAT registered, then whenever you supply taxable (standard or reduced rated) goods or services to another VAT registered business, you must provide a VAT invoice.
The following bits of information needs to be included:
|The details of the business issuing the invoice||Name of business, address, telephone number, email etc.|
|VAT registration number||If the business is VAT registered, their unique VAT registration number must be shown.|
|Customer’s name and address|
|Invoice number||This must be unique and must follow on from the last invoice (in sequential order).|
|Account and your ref||The account is the business's reference for their customer. You ref relates to a purchase order (a reference could also be included for a delivery note).|
|A clear description of each type of goods or services required||The unit price, quantity, rate of VAT and rate of discount should be shown clearly for each item. Also show the amount payable (excl. VAT) for each iem and the currency.|
|Net price, VAT and total price including VAT||The net total of all goods or services supplied. The VAT added (e.g 20%) and the total amount payable by the customer.|
|Terms||These are the items under which the invoice has been issued.|
Other terms you could see on an invoice are:
|Cash terms||No credit.|
|30 days from date of invoice||Payment due 30 days after the invoice date.|
|Net 30 days||Payment due 30 day after the delivery date.|
|Retention of title (ROT)||Ownership of goods sold does not pass to the buyer under payment has been made.|
When a decision has been made to grant a customer credit, then the customer will be advised (usually in writing) the following:
The step-by-step guide takes you through:
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This page will give you an overview of VAT, how to calculate it and the effect VAT has on your customers.
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