In the business world, Invoice is what proves to be a legal record of a sale of product of service. It is through the invoice that business enterprises do their finance management and it is through the invoices that sellers get paid by the buyers. It is with the help of invoices that companies show their income and gets assessed for tax. Thus, it is the basic unit of finance management.
Invoices also play an important role as these are a record both for the buyers and the sellers. A basic invoice may or may not contain full information about the sale or purchase of goods or services, but a well-designed invoice does. Thus, a detailed invoice proves to be an indispensable tool for accounts to keep track of the finances.
Besides having the basic details about the sale or purchase of services, invoices also acts as record of the detailed information about the buyer and the seller including their registration number, PAN, GST, TIN, CIN etc. which come handy for the auditing team during tax assessments.
Need of an invoice
There are a lot of functions that an invoice caters to. It is not just the details or the details of the product or services but it is also the most dependable means in finance management. It is one of the important steps in the process of realization of a sale or purchase.
Not Just Any Invoice – Importance Of Proper Invoice
The purpose of this article is to explain and stress on the need of proper invoicing. So, what is the difference between an invoice and a proper one. Well, the difference is related to what its contents are. A very basic invoice would just be a statement of sale or purchase of goods or services with a mention of the total amount and the tax if applicable.
On the other hand, a detailed or proper invoice would be a detailed version of the same with all the necessary details that the buyer or seller would need at the time of assessing tax or audit. It can also have detailed mention of the nature of product or services rendered as well as a complete breakup of the taxes applicable.
Detailed Invoice Creation May Be Time Consuming But It Is Worth It
Generating a detailed invoice could be a time intensive process but it is in fact the best way to keep transparency in business and cutting further communication related to details sought by the buyer. In addition to this, playing fair and not hiding anything in an invoice is a good thing for any institution. On the other hand, a well carved out and well-designed invoice could lead a lasting impression on the recipient and might help expedite payments. You will never realize how much important the invoice’s design and contents are as these might set you apart from other businesses creating a lasting impression.
Lastly, besides the invoice, even a proper payment receipt is important as it confirms the buyer that the payment has been made successfully. Furthermore, a proper invoice, a proper invoice payment receipt all facilitate in the auditing process and eases assessment besides being tools of creating a reputation for your institution.