Cash is king is an old saying in the business world, and it simply means businesses should gain perfect revenue. Any business deal closed is only meaningful when the client makes the payment.
Well, this is only possible when a company sends a sales invoice to urge for payment.
Invoicing is an important component of the business operation that ensures smooth and accurate payment flow. Moreover, it also helps in performing financial tracking and record keeping.
But what other things define sales invoices? What are its types, and how to generate a perfect sales invoice? Uncover the answer to every question in this blog.
What Is a Sales Invoice?
A sales invoice is a document that business professionals issue for clients to request payment. An invoice includes every detail of the service or the product related to the quantity, rate, and tax. Along with it, the invoice carries payment terms and due dates.
The major role of sales invoices is to streamline the invoicing process and sales process and help businesses acquire payment on time. So, the sales invoice meaning is a broad and valuable term in the business world.
Key Points –
- Sales invoices are specifically tied to the sale of goods or services.
- It includes details of shipping and handling charges.
- These invoice documents are legally binding.
- It gives a complete overview of the number of sales and their associated payments.
Why Are Sales Invoices Important?
The role of sales invoices is not limited to the on-time payment of the company. They contribute a lot to other sales activities like current status and planning.
Standardized Accounting
Invoices are good for keeping accounting records. They help professionals and accounting department to acquire a proper flow of payment without delay. They also play a good role in the legal process and tax compliance.
Accurate Analytics
Proper invoicing simplifies the auditing of business sales analytics. Companies can have the future prediction of cash flow and creation of precise budgets with invoicing.
Well Manageable Inventory
Inventory management is highly crucial when a business sells something. This aids in obtaining an overview of the remaining inventory of available products. Professionals also get an idea about the product that performs well in sales.
Types of Sales Invoices
There are four types of sales invoices and each one has a different purpose. Let’s understand them one by one.
1. Standard Invoice
This is the simplest invoice type which is useful in any sales transaction. It covers the basic information and its core purpose is to receive payment from the client.
2. Proforma Invoice
The proforma invoice is more about informing customers about the expected payment they need to make. This type of invoice is given prior to delivering goods or services. It is not as identical to the typical sales invoice.
3. Recurring Invoice
Some customers buy services or products at regular intervals. Subscription and membership majorly come into this category. Recurring invoices find their application in such cases. Often companies use invoicing software to generate recurring invoices for their customers.
4. Commercial Invoice
A commercial invoice finds its role as international trade documentation. Such invoices are complex due to international border shipping and products’ customs valuation.
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What Are the Benefits of Using Sales Invoices?
After knowing the sales invoice definition, let’s have a look at its benefits. Sales invoices are valuable for a business, and they offer multiple benefits. Some of the advantages of sales invoices are as follows:
1. Refine Cash Flow
Sales invoices are documents used to request payment for the customer. It carries all the details of the product or company’s service to the customer. It outlines the details of the item, rate, quantity and total due amount. So, it increases the likelihood that your customer pays you. Thus, it keeps payment flowing in the right way and lets the business avail of the payment.
2. Financial Tracking
Business professionals can organize business transactions in well defined structure through financial tracking. It ultimately helps in analyzing the financial status, maintaining the record and getting an overview of the company’s financial health.
3. Enhancing the Company’s Image
Invoicing helps a company to improve its image. While issuing invoices, the company is providing the standard service. It enhances the customer relationship.
4. Legal Documentation
Invoices contribute to the legal actions that arise during the business transaction. An invoice is useful for audit, tax purposes, and financial reporting. Invoices act as proof and support during the legal document and process.
What Information Does a Sales Invoice Include?
A sales invoice is known to be a complete and valid accounting document when it includes certain information. These data are crucial, and business owners must fill them in correctly. Here is the list of details that the sales invoice includes.
Company Name
The sales invoice should cover the name of the seller and buyer. The seller’s information should come first at the top of the invoice. Buyer information comes after seller information. Along with the name, it is good to include the address and contact information.
Invoice Date
The invoice date helps enhance the payment flow. By adding an invoice date to your sales invoice, you can improve the organization and workflow of your sales process and accounting department.
Contact Information
The customer’s contact information is important to include in an invoice. It helps customers to easily contact you in case of any issue.
Payment Due Date
The invoice should include the payment deadline which helps to identify when the payment is due. This helps customers to be careful about the last date of payment.
Total Amount Due
Always mention the total amount in the invoice that the customer needs to pay. Including applicable taxes, service fees, and discounts is also important.
Payment Terms
An invoice should contain payment terms. These points are helpful for the customer to understand the payment policy of the company and be aware of the payment process.
Accepted Payment Methods
Companies should include the payment method that is acceptable to them. Some of the common methods to include in an invoice are as follows.
- Check
- ACH payments
- Credit cards
- Recurring fees
- Google Pay, PayPal, Stripe, and Payoneer as online payment methods
How to Create a Sales Invoice?
Most of the professionals don’t know the correct method of how to make a sales invoice. Creating a sales invoice is simple with customized templates. Professionals can create sales invoices using software like Moon Invoice. Templates are also available in Google Suite or Microsoft.
Give Attention to Gaining the Title
The word ‘Invoice’ should be highlighted and should be bold. This helps avoid confusion with other documents and gives a tag of invoice to the document.
Covering Relevant Contact Information
The header section should include the company name, billing address, and phone number. Companies should include a logo to enhance their professionalism. Whenever you use a template make sure that all the fields are there.
Invoice Number and Date
After creating an invoice, it is essential to assign a unique invoice number to each one. This also simplifies invoice tracking. Similarly, including the invoice date is essential as it helps to understand when the invoice was issued. In the case of international trading, you must mention the invoice date.
Mention Products and Services
The invoice should carry the proper description of the goods or services that the company offers to the client. The description should be in clear and detailed form for better understanding. The product or service bifurcation should include the corresponding cost breakdown.
Add Payment Terms
Including clear payment terms is mandatory to include in the invoice. Payment terms should be about the duration to make the payment, methods to accept payment, and other relevant points.
Signature
The invoice should include an authorized signature. Business owners or any other authorized person should add their signature. This makes the invoice highly valid and looks officially a professional sales invoice.
Free Sales Invoice Template
There are various free sales invoice templates available to create sales invoices quickly. Moon Invoice offers highly customizable templates available in Excel, Word, Google Docs, and PDF. Sales professional can download the sales invoice template and create the invoice accurately.
Sales Invoice Example
Suppose a company named ‘A’ issues a sales invoice for customer David. The customer purchased product 1, product 2, and product 3 at the prices of $10, $20 and $30. Then, taking a sales invoice example, the following details will be included below.
- Company’s name, address, and contact information
- Address and contact information for customer David
- Description of product 1, product 2, and product 3
- Invoice number and date
- Rate – $10, $20 and $30
- Quantity of products
- Payment terms
- Signature
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What’s the Difference Between a Sales Invoice, Sales Order, and Sales Receipt?
Sales invoice, sales order and sales receipt are different sales documents in terms of their meaning, purpose and issuing period.
| Determinant | Sales Order | Sales Invoice | Sales Receipt |
|---|---|---|---|
| Definition | Sellers generate a sales order document after the customer makes an order for a product or service. | Sales invoice definition refers to a document that the seller issues to request payment from the client side. | The sales receipt is issued by the seller to the customer as proof of the payment once the customer pays the invoice. |
| Purpose | Sales orders are used for acknowledging about order receiving and preparing the details of orders. | A sales invoice is essential for prompting payment and streamlining the payment process. | Useful as a confirmation that the transaction has been over and payment has been received. |
| Usage | Sellers use sales orders to ensure the correct products and services are delivered. | It is useful to offer a record for both seller and buyer of a transaction. | Sales receipt is also useful for record keeping along with warranty claims and returns. |
| Time of issue | Its issuing time is before the delivery of goods and services. | Its issue time is after the delivery of goods or completion of services. | It is issued immediately after the payment is made by the buyer. |
Conclusion
A professional sales invoice helps streamline the invoicing process, sales process, and payment process. Business professionals should send invoices with complete details and correct data.
Monitoring cash flow and sales is highly accurate with sales invoicing. It has numerous advantages for business operations.
A proper, clean design and error-free invoice not only accelerates your payment but also crafts a good customer relationship. Looking for a reputed invoicing solution? Contact Moon Invoice now.
Frequently Asked Questions
Jayanti Katariya is the founder & CEO of Moon Invoice, with over a decade of experience in developing SaaS products and the fintech industry. He holds a degree in engineering. Since 2011, Jayanti's expertise has helped thousands of businesses, from small startups to large enterprises, streamline invoicing, estimation, and accounting operations. His vision is to deliver top-tier financial solutions globally, ensuring efficient financial management for all business owners.
