A Complete Sales Invoicing Guide
A sales invoice is a document sent by a seller of goods and services to his client. It includes the description of goods and services sold, the total amount receivable, the preferred payment method, and much more. A sales invoice acts as a receipt for tax purposes too.
Below, we’ll cover:
- Why Is A Sales Invoice Important?
- What Should a Sales Invoice Include?
- What Is the Purpose of a Sales Invoice?
- How to Make a Sales Invoice?
Why Is A Sales Invoice Important?
Though the primary purpose of a sale invoice is to request payment from the client, there are various secondary reasons sales invoicing is essential for any business entity.
Facilitates accurate bookkeeping
Sale invoices act as a record for all the sales, which helps maintain books of accounts. It helps in preparing the ledger, the cash flow statement, and other financial reports accurately.
Helps in filing tax returns
Sales invoices also act as a means of filing tax returns. The IRS also recommends sales invoices as the best-supporting documents when filing for tax returns. They not only make processing tax returns easier but also help in filing them correctly and accurately.
Acts as legal evidence
Sales invoices also act as legal evidence that could make you win petty lawsuits against your company. As sales invoices include every detail of goods and services sold, the date of purchase, and even the signature of the client, they may help you out big-time in proving yourself at no fault.
Helps in inventory management
Inventory management involves recording the stock of your products so that you stay well informed when the stock is about to go out. Having sale invoices handy helps manage the inventory well and it will let you know how many orders have been dispatched already and the future needs of your stock.
Helps in business planning
Businesses need continuous future planning of extension or modernization of services. Sales invoices help a wee bit here. These are a great medium to know the feasibility of your future business plans as it generates information like revenue earned in a given period. This data can be used in budget forecasting. Sales invoices also provide data like the cash availability in the business that can be used for further expansion and diversification.
As the sales invoice includes data on various services provided by you, you can know which services are gathering more revenue and focus more on the ones generating more income. This way, you can also further improve your services by seeking advice from your clients on low-income services.
What Should a Sales Invoice Include?
A sales invoice should include various important information. Here is all it should consist of:
First things first, add a company logo at the top of the sales invoice. The header should also include company information like name, address, contact number, and email address.
Client contact information
Below your business information, you should add the client information like the name, the contact information of the person handling invoices, and so on.
Assign a unique number to each of your invoices. This will help in tracking down your invoices. Adding an invoice number to each of your invoices is necessary to ease your work later, especially while maintaining bookkeeping.
Goods and services details
Mention all the goods and services provided with all the details related to it like the number of goods, price or rate of the goods or service and other possible brief description.
Don't forget to add a footnote stating the terms of your payment. This should include the type of payment methods you accept and the extra charge for late payments.
Payment due date
Below the payment methods accepted, mention the payment due date, i.e., the last date of making the invoice payment. You can use words like Payment due before Oct 31, 2020, or payment due in 30 days.
Total amount of invoice
Also, mention the total amount of payment to be received by the client, inclusive of all the taxes.
What Is the Purpose of a Sales Invoice?
There has to be a way of requesting payment for the services granted. It should better be provided in written format and should include a detailed description of goods and services. Thus, the sales invoice acts as a means of receiving payment from the client such that a purchaser can also match the invoice content with its purchase orders.
When both parties are satisfied with the sales invoice, the payment can be forwarded smoothly according to the terms of payment and the due date mentioned in the sales invoice. This also eliminates any confusion and acts as proof in cases of conflict.
Also, a sales invoice is beneficial for both the parties to maintain their financial statements.
How to Make a Sales Invoice?
You don’t necessarily have to make a sales invoice yourself. If you are looking for a sales invoice, you can download sales invoice templates for free from WeInvoice, customize them according to your needs, download or print them and send them right away for receiving your rightful payments.
What is a charge sales invoice?
Charge sales invoice means charging by invoice, i.e., when you agree to provide goods and services to your client before receiving payment.