8 Basic Invoicing Questions you were afraid to ask
Sales Invoices, also known as bills or tabs, are commercial invoices issued by sellers to buyers. The invoice indicates the products purchased or services sold to the buyer.
Payment terms are usually stated on the document. An invoice is a legal obligation in many instances, for example VAT vendors, vendors are required under the VAT Act to issue a valid VAT invoice for every sale and purchase.
Another interesting fact is that invoices provide a record of services offered and when paid there is also a record of cash flowing into the company.
So, let's look at those eight Invoicing questions you were afraid to ask:
1) WHAT IS INVOICE PROCESSING IN ACCOUNTS PAYABLE
This function involves managing all the incoming invoices from suppliers and ensuring these are correct and paid on time.
2) INVOICE PROCESSING JOB DESCRIPTIONS
The person performing invoice processing could be in the debtors or creditor's function or even both. The same person usually sends invoices and can also match payments to the correct invoices.
3) INVOICE PROCESSING SYSTEMS
Having a reliable, secure, and accurate invoicing system is vital, without this the business is sure to fail. Invoicing is a request and is the foundation of the analytics behind the financial statements of a company. The best accounting software is Xero which offers a lot of automation to reduce the repetitive tasks in invoicing and reminders.
4) VENDOR INVOICE PROCESSING CHECKLIST
- Must contain the word Invoice or Tax Invoice
- Name, address and VAT registration number of the supplier
- Name, address and the recipient is a vendor, the recipient's VAT registration number
- Serial number and date of issue of invoice
- Accurate description of goods and/or services (indicating where applicable that the goods are secondhand goods)
- Quantity or volume of goods or services supplied
- Value of the supply, the amount of tax charged and the consideration of the supply (value and the tax)
Note: all these criteria to be a valid VAT Invoice for submission to SARS.
5) INVOICE PROCESSING PROCEDURE
- Verify all information on the invoice is correct especially VAT numbers
- Enter the invoice into your accounting system
- Forward the invoice for approval by a senior
- Ensure payment is set for the invoice if not paid yet
6) PROCESSING INVOICES FOR PAYMENT
When processing an invoice, it will go to the debtor's account. The invoice will remain unpaid until the payment is received in the bank account and allocated to the debtor's invoice. Ensure your request for payment as early as possible to avoid the debt going bad.
7) WHAT IS CODING IN INVOICE PROCESSING
Coding is the process of allocating the invoice to the correct account in the chart of accounts.
8) INVOICE CHECKING PROCESS
The invoice checking process is important to ensure there are no errors sent out to your clients or incorrect supplier invoices which could affect multiple accounts in your books. A basic process could consist of:
- Check the details of both parties (supplier and customer)
- Verify the billing date
- Verify terms of payment
- Verify due date
- Approve invoice
- Follow up on payment
Frequently asked questions
What are the types of invoices
There are many types of invoices, namely
- Final invoice - The company issues a final invoice to clients at the end of a project or service.
- Recurring invoice - Recurring invoices are useful for businesses that periodically charge clients the same amount for their services.
- Debit invoice - A debit invoice, also known as a debit memo or debit note, is used to add additional charges to the outstanding amount
- Timesheet invoice - A timesheet invoice is a standard invoice that's based on a timesheet.
- Standard invoice - A standard invoice, aka “basic invoice,” or simply “invoice,” is issued by a business and submitted to a client.
- Credit note - An invoice issued by the seller when the buyer returns the goods.
- Sales invoice - A sales invoice is commonly called the “regular” invoice.
- Expense invoice - An expense invoice is a document submitted to an employer for reimbursement of business-related expenses.
- Account statement - Account statements offer a summary of the services and/or goods purchased, payments made, and any outstanding balances that are still due.
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