Invoice

For the Japanese company, see Invoice (company). It has been suggested that Bill (payment) be merged into this article or section. (Discuss) Proposed since December 2009. An invoice or bill is a commercial document issued by a seller to the buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. An invoice indicates the buyer must pay the seller, according to the payment terms. The buyer has a maximum amount of days to pay these goods and are sometimes offered a discount if paid before. In the rental industry, an invoice must include a specific reference to the duration of the time being billed, so rather than quantity, price and discount the invoicing amount is based on quantity, price, discount and duration. Generally speaking each line of a rental invoice will refer to the actual hours, days, weeks, months, etc being billed. From the point of view of a seller, an invoice is a sales invoice. From the point of view of a buyer, an invoice is a purchase invoice. The document indicates the buyer and seller, but the term invoice indicates money is owed or owing. In English, the context of the term invoice is usually used to clarify its meaning, such as "We sent them an invoice" (they owe us money) or "We received an invoice from them" (we owe them money).

A typical invoice contains[1][2]

The word invoice (or Tax Invoice if in Australia and amounts include GST). A unique reference number (in case of correspondence about the invoice) Date of the invoice. Tax payments if relevant (e.g. GST and VAT) Name and contact details of the seller Tax or company registration details of seller (if relevant)[e.g. Australia Business Number (ABN) for Australian businesses.] Name and contact details of the buyer Date that the product was sent or delivered Purchase order number (or similar tracking numbers requested by the buyer to be mentioned on the invoice) Description of the product(s) Unit price(s) of the product(s) (if relevant) Total amount charged (optionally with breakdown of taxes, if relevant) Payment terms (including method of payment, date of payment, and details about charges for late payment)

In countries where wire transfer is the preferred method of settling debts the printed bill will contain the bank account number of the debtor and usually a reference code to be passed along the transaction identifying the payer. The US Defense Logistics Agency requires an employer identification number on invoices.[3] The European Union requires a VAT (value added tax) identification number. Recommendation about invoices used in international trade is also provided by the UNECE Committee on Trade, which involves more detailed description of logistics aspect of merchandise and therefore may be convenient for international logistics and customs procedures

Bill Discounting
Also known as a discounting of bill, a bill discounting is a process that involves effectively selling a bill to a bank or similar entity for an amount that is slightly less than the par value and before the maturity date associated with the bill of exchange. The debtor tenders payment to the new owner of the discounted bill in the full amount agreed upon originally. This approach allows the issuer of the bill to receive cash before the actual due date associated with the bill, while also allowing the buyer to make a modest profit on the cash advance extended to the bills originator. One of the easiest ways to understand how bill discounting works is to consider a bill of exchange issued by ABC Company to its client, XYZ Company. ABC Company decides to cash in the outstanding bill in order to make use of the revenue now rather than later. To this end ABC approaches a bank with an offer to sell the bill for 90% of the par value. The bank looks over the transaction and decides the deal is viable. Upon approval, ABC receives 90% of the par value of the bill and instructs XYZ Company to remit payment to the bank. Once the bank receives full payment from XYZ, the deal is considered complete. There are several factors that a financial institution will consider before choosing to enter into a bill discounting transaction. One has to do with the degree of risk involved with making the purchase. This will usually mean evaluating the debtor involved to determine what degree of risk exists that he or she will either settle the bill late or even default on the debt altogether. The amount of time that remains until the bill comes due is also a consideration, with institutions favoring a shorter duration between buying the instrument and receiving payment in full. Assuming the financial institution determines that the degree of risk involved is within an acceptable range, the transaction can be completed and the originator of the bill of exchange compensated with an agreed-upon percentage of the total par value of the bill. Part of the bill discounting procedure will involve the creation of a contractual arrangement between the seller and the buyer of the commercial bill. Typically, the terms

of the contract identify the percentage to be paid to the seller, and also include provisions that protect the buyer in the event that the bill is not paid according to terms. This may include the imposition of late fees or other charges, or even ultimately holding the seller liable for full payment of the bill discounting obligation if the debtor should default on the outstanding balance.