An invoice is a document or a bill issued by salesperson, vendors, suppliers and other services rendered for a company or a person
The Meaning and the Use of Invoice in Business
First of all a short disclaimer: the objective of this article is to set the background for further articles where we discuss some ways to automate common back office tasks using excel and it give general definitions to which we will refer later. So this is the background for some “one size fits all” business scenarios, used to explain related excel features later, therefore terminology, meaning and legal stuff may not apply in your country. Bottom line: get excel tricks and software from this website, …for everything else refer to your business/tax advisor.
What Is An Invoice?
An invoice is a document or a bill issued by salesperson, vendors, suppliers and other services rendered for a company or a person. This is a type of document where all the details of the product taken, the description of the service, how many hours to bill and other things subject for payment are written there. The prices were also written usually on the right side and the total amount to be paid on the lower right side.
An invoice is not a receipt. The items listed on the invoice are items that are to be paid by the company or an organization. The invoice will be forwarded to the secretary, the accountant or the person in charge for the reimbursement of the fund to pay the amount on the invoice. Usually, the company and the supplier of goods or services had made a deal for that particular transaction. Therefore, when the invoice comes in, the payment will follow instantly or according to the due date given.
The Uses Of An Invoice
Practically an invoice is a document that states an incurred debt. Once the company or the person gets some goods with payments to follow and not during the time, the goods or services are taken, an invoice will be issued. When the person or the company had paid for the items and services, then the invoice will be marked paid by the supplier and the receipt will be issued. However, this particular incident usually happens if the transaction is on delivery orders. For example, the “company A” which is the supplier delivers boxes of soda to “company B” everyday. The service person or the one who delivers that particular item may not collect the payment immediate for the delivered item so company A will send and invoice to company B indicating the number of items taken and the amount to be paid.
The invoice is very use for both the supplier and the receiver of supplies. With this document, they can keep track of all their transactions and their expenses. This document is very helpful to aid their monthly financial report and evaluation. Since this document is legal and authentic, this can also be used on court proceedings if there are legal matters argued, like unpaid debts, because the invoice is an evidence of a legitimate debt. However, some companies might abuse the use of invoice by making false documents that there are funds missing due to unpaid items. They can use invoice as their evidence to fulfill their scheme. Good thing, the law will not allow this document alone as evidence. This document will only be legitimate if there other evidences that backed up the invoice such as duplicate bills, an inventory and other records that they have. These are called corroborative evidences, which prove that the items do really exist or the service was actually received or performed. Everyone has the right to challenge any suspicious and abusive documents in the court.
The invoice can also be used for inventory and checking. If the company sends an invoice for the items delivered, the receiver or the other company can use the invoice to compare the items they have received if the items matched correctly. That way they can settle some problems and be able to resolve it as soon as possible.
The Processing Of An Invoice
When you process your invoice, you need to get into a series of procedures, which properly handles the invoice. This is to make sure that the bills are paid on time. Some businesses typically have their own system on processing their invoice. The supervisors, accounting staff and other personnel are usually involved in this particular system in order to make the process smoother. Because of our modern technology equipment and computers, they can now use the latest software to streamline the processing of the invoice. With this technology, they can easily locate records, and gain access to current outstanding invoices.
Delivering the invoice by mail, fax, email and other systems is the first step of the process. Once the invoice is received, an accounting staff member will review the invoice and check if the items are marched with the actual items they have received. The invoice may have a purchase order number in it, which indicates that the purchased order is, verified the person in charge. This procedure will involve a lot of verifications and checking until all documents and bills matched. Then that will be the time that invoice will be approved.
The Modern Way To Process An Invoice
With the use of the internet and computers, your personnel do not have to travel to another company to check the pending invoices. We now have electronic processing systems that process invoices and allow the company or the person in charge to record the invoice data. The data may include the due date of the item, details, the integrating vendor and more. The list of pending invoices sorted according to their due date can easily be requested by accounting supervisors.
They do not have to stand or travel though because the payment can be send through electronic fund transfer or any online banking procedures as soon as the accountant approves the invoice and waved a go signal for the payment. A receipt will also be send back in order to ensure that the payment went through and all the transactions are settled.
The systematic processing of your invoice can become smoother with the help of the latest software that we have today. However, the number of system processing may also vary due to the variety of systems and software used by other companies. Since the internet is always available, you can always gain access to your database anytime or send and receive invoices from another company fast and easy. You do not have to go through a bunch of papers on your desk. Of course, it is nice to have a hard copy just in case your computer crashes.
