What Is Invoicing and Billing?
An invoice, which may also be called a bill, is a written agreement between a seller and a buyer that establishes an obligation that the buyer agrees to pay a set amount to the seller for goods or services. The bill of sale typically contains detailed information of the agreement, making it perfect for both the purchaser and seller to retain a copy for their records. However, there’s a bit more that goes into invoicing than meets the eye. This is one reason why investing in invoice software is a good idea for sellers. Below is a detailed breakdown of what goes into a bill and why it’s important for your company.
What Information Is Included on an Invoice?
One reason why a bill of sale is so important is all the information it provides to both the seller and buyer. Some of the information that you’re likely to find on a bill includes:
- Names and addresses of the supplier and buyer,
- Date of bill creation,
- Contact information,
- Detailed description of the services or products purchased, and
- Terms of payment.
The terms of payment on a bill of sale are important because they specify the method in which the buyer will pay the seller. The terms will differ between each bill, but a common example is a Net 30-day agreement. This means that the buyer agrees to pay the entire amount due within the next 30 days. The seller and the buyer have to work out and set up their own terms of payment. Invoicing software can help companies keep track of the terms they set up for each of their customers. This allows businesses to be more flexible with consumer needs.
When it’s time to send a bill of sale to your customers, there’s an array of information that you should include. Keeping up with all of the information that should be included can be challenging, but invoice software can make sure that you never miss any. When filling out a bill, you should start by
- Identifying the Customer – Identifying the customer by name is important. You may also want to directly identify any sub-customers in the file.
- Document Numbers – Include any documents numbers that are related to the sale. This should include any sales agreements, purchase orders or estimates that were previously discussed with the customer.
- Identify All Sold Items – All items that are being sold in that transaction should be on the invoice, including actual physical goods as well as services and software. If you’re using invoice software, the total for each item will be calculated out for you, making the entire process easier.
- Discounts and Deposits – If the consumer has already made a deposit or you’re giving a discount, it should be applied to the bill.
Other information that you should include on the bill of sale includes shipping information, if applicable, and any discounts available for paying the bill early. For example, let’s say that you have a customer who’s on a Net 30 payment plan. If the bill is paid within 10 days, you may decide to take 2 percent off the total. You could represent this like 2/10 Net/30.
Confusing Purchase Orders with a Bill of Sale
People often get purchase orders confused with bills. While they seem similar, a purchase order is given to a client before the transaction takes place. A bill is given to a client after the transaction. Purchase orders are generally used as a way for suppliers and vendors to record the orders that they receive.
Benefits of Bill of Sale Software
Software that can help your company write and manage your bills is important. In fact, this type of software can add a number of benefits to your business, including
- Ease of use, and
While not everyone is an accountant, it’s still important to keep up with all of your bill of sale files. This type of software can help you do just that. Some companies overlook this entire process, but in the end, it’s only hurting the business. Bill files give your company proof of the items it sells and the work it does. Without properly tracking them, you might find yourself in a tough situation very quickly.
Having a professional-looking bill of sale is important. Using software to create an official-looking bill will help you not only stay organized but also appear more professional to your clients.