Invoices are the bedrock of the payment system. For any business in existence, invoices facilitate payments. They help in the process of bookkeeping and accounting for businesses. Invoices enable both customers and suppliers to keep track of the transactions between them on any given day at any period. The article helps you understand how to make an invoice.
Follow the below steps to make an invoice-
Creating a design for an invoice today is relatively easy with the various tools and software available over the internet. Customising invoices is now a piece of cake due to ready templates that can be easily edited. The idea is to select an invoice template that is professional yet unique. This is because invoices can give the customers an impression of the kind of company they are dealing with.
The essential details of the company, such as the name, address, and contact details, have to be cued in. The contact information and the GSTIN of the seller and buyer have to be added as well. It is always a good idea to include the company’s logo in the invoice so that it is easily identifiable and creates a lasting impression in the mind of the customers.
A detailed description of the goods or services provided and the rate per unit, and the quantities should be depicted in the invoice. This ensures that the invoice is processed faster and the payment for the invoice is received on time. If the client is aware of what they are paying for, the payment will likely be immediately released. Moreover, this helps both the client and the seller in identifying the invoice faster.
Dates play a very important role ie processing an invoice and enable both the seller and the customer to keep track of the invoices due for payment and the overdue ones. Dates automatically create a sense of responsibility on the client’s part to ensure that prompt payments are made. At the same time, it creates a responsibility on the seller’s part to follow up on the non-payment of the dues. The following dates are vital to an effective invoice-
Every invoice has to have a unique serial number to facilitate easy tracking of the invoices. This unique number is an essential requisite for proper documentation of the invoices, especially for accounting and taxation purposes. It helps the client and the supplier identify and track a particular invoice with ease. The GST law has prescribed rules for assigning invoice numbers to invoices raised by the GST registered businesses.
Parallel to the description of the goods, the quantity, rate per unit and the value of each type of goods supplied have to be arrived at. The total amount of the items also has to be depicted clearly, after which the breakup of the applicable taxes and cess is also shown for clarity. The gross total amount of the items with the addition of the applicable taxes and cess gives us the total (total taxable value) of the invoice.
The terms of payment for the goods or services provided may be previously agreed upon by both parties. However, it is always advisable to include the same in the invoice for documentation purposes since the invoice itself acts as evidence for the sale transaction taking place.
The mode of payment may be mentioned, be it cash, cheque, bank transfer or any other acceptable mode of payment. For bank transfers, details such as the account number, name of the bank, name of the account payee, the IFSC Code, etc., are mandatory. The terms of payment, such as discounts for early payments or penalties for payment details, may also be added, in any case.
It is not mandatory to have a comments section. However, since the invoice is a means of communication between the client and the company, it is always helpful to add any information that may be useful. Here are a few sentences that could be added to the comments section-
The signatures on an invoice document further enhance its legal standing as evidence of a particular sale transaction. Primarily, invoices issued under GST will mandatorily bear on them a valid signature, thus enhancing the document’s authenticity. The signatures of the buyer and the seller prove that the terms of sale are agreed upon and accepted by both parties.