Define Invoice and What Does It Include?

Last Updated: April 27, 2024

Define Invoice and What Does It Include?

An free invoice is a document people commonly use in business dealings or transactions (usually in sales transactions). It is typically issued by a service provider to a client, usually as a bill listing all the goods or services given to the customer along with the corresponding price for each listed item.

An invoice is issued when a client receives goods or services from the service provider without having paid the full amount upon receiving such items. Upon payment, the service provider typically marks the invoice paid, and issues a sample receipt to recognize the customer’s payment.

What Does an Invoice Include?

An invoice is a document which serves to record the transaction between the service provider and the customer. It is thus important for the service provider to know what to include in a sales invoice before issuing one. Here are some (if not all) of the items included in an invoice.

  • A reference number which must be unique for each one.
  • Sender’s information including company name, address, and contact details.
  • Receiver’s information including name (or company name), address, and contact details.
  • Date when the invoice is created or issued.
  • Details of the transaction, including the goods and services rendered.
  • Description for each item.
  • Prices for each item.
  • Sum total or amount to be payed by the customer, including sales and discounts and tax invoice(if any).
  • Due date of payment.
  • Payment terms, and conditions to be set by the service provider.
  • Signature of service provider.
  • Signature of client.

Uses of an Invoice

Aside from being a record of the transaction, an invoice may be considered as a billing invoice, primarily asking the client for the payment he/she owes the service provider.

It informs the client about the purchase he/she has made. This allows the client to check for the accuracy of the information included in the invoice, otherwise, he/she will either confirm it with the service provider or seek legal action. At the same time, the service provider may use the invoice as evidence during a legal action, in case the customer does not abide with the agreed upon terms and conditions.

How to Prepare an Invoice

The preparation of an invoice is a process which any service provider must master, if he/she wants to ensure a successful transaction with a customer. Here are the basics of preparing an invoice.

  • Assign a different reference number for each invoice in pdf. Assign the numbers in order.
  • Write your company’s information, and your customer’s information on the blanks provided.
  • Write the information regarding the transaction (refer above).
  • Input the accurate total amount payable.
  • Provide specific payment terms and conditions (e.g. when, where and how the payment should be made), and make sure the customer agrees and abides with them.
  • Organize the information into a chart or a table.
  • Write any additional information or remarks you want to include.
  • You can include symbols, such as a company logo to make your invoice unique to other companies’ invoice.
  • Review the information you have written before you issue the invoice to the customer.

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