A sales invoice is a crucial piece of accounting document that helps to track the detailed record of a sale in a business. The size of the business or organisation doesnt matter. So, whether you are a small business owner, a freelancer, or a large organisation, a sales invoice is important to maintain a stable cash flow ensuring smooth transactions and operations for the growth of the business.
Table of Contents
What is a Sales Invoice?
A sales invoice is a document that is issued by a seller to the buyer outlining the details of the transaction that has been made. The document may have detailed information such as:
- Name of the seller, address, contact details, Taxpayer Identification Number (TIN)
- Contact details of the customer
- An invoice number
- Date of the transaction
- Description of the transaction
- Total amount of the transaction
- Discount if applied
- Total taxes paid
- Terms of payment
- Terms & Conditions
Sales Invoice Template
Here are the details you need to include in a sales invoice:
Business details
The header section of the invoice should contain the details of your business. You may include the logo, name, address, and contact details in that section.
Client details
Outline the details of the client such as name, contact information, and address of the client in the next section.
Invoice number
A sales invoice should always have an invoice number. It should be unique as it is used for tracking payments.
Details of services rendered/product delivered
An itemised list of products and services delivered to the client has to be created. You may add information such as description, hours worked, and quantity delivered in this section.
Total amount due
The total amount due has to be mentioned at the bottom of the itemised list. Ensure that you include taxes while calculating the total amount due.
Payment terms
Mention the term of the payment in the sales invoice. For example, whether it is cash, credit card, etc.
Payment due date
You may provide an exact date for payment or any payment window that you follow. For example, you may intimate that the payment should be made “X” days after receipt of the invoice.
Sample Sales Invoice
How do Sales Invoices Work?
A business has different types of sales invoices depending on the nature of the transaction. Once the product or service is delivered to the customer per their terms, the business will issue an invoice.
Listed below are different types of sales invoices and how they work:
Standard invoice
The most common type of sales invoice businesses generate to request payment from their customers.
Recurring invoice
This invoice is generated regularly. Generally, it is used for subscriptions or ongoing services.
Pro Forma invoice
It is a quotation or estimate that is sent to the customers before delivering the product or service.
Credit invoice
It is generated in cases when the business issues a refund or discount.
Debit invoice
It is used when the business increases the amount owed by the customer.
Commercial invoice
Generally, used for international sales. It provides necessary details for customs purposes.
Interim invoice
It is issued when a large project is divided into smaller chunks. When the project is completed, the final invoice is generated.
Why is a Sales Invoice Important?
The primary purpose of a sales invoice is to request for payment the delivery of goods and services. However, there are other benefits of using sales invoices that are listed below:
- It ensures that your bookkeeping is accurate and updated.
- Helps during tax audits to verify claims made on tax returns.
- Tracks the revenue thereby giving insights to future financial planning.
Automated Invoice and Vendor Management
Tools like RazorpayX Business Banking+ help businesses and vendors eliminate the risks that come with manual invoice management.
With features like OCR-powered auto-fill, self-serve vendor portals and automatic reconciliation, RazorpayX Business Banking+ is the tool of choice for all your business banking needs.
FAQs
Who issues a sales invoice?
The service or goods provider issues the sales invoice. Whenever the seller delivers the goods or services against the customer’s request, a sales invoice is issued.
Are sales invoices and sales receipts the same?
Sales invoices are issued before sending the payment, and a sales receipt is issued after the payment has been received. It serves as proof of the payment that has been made against the received invoice.
How to calculate tax on a sales invoice?
Multiply the sub-total amount by the applicable tax rate, e.g. GST. Add the amount that you get to the total amount due.
