Accounts Notes: ALL ABOUT INVOICE AND SCOPE AND PURPOSE

Wednesday 13 April 2011

ALL ABOUT INVOICE AND SCOPE AND PURPOSE

An invoice is essentially a detailed bill left by vendors and outside suppliers for goods or services rendered to a company. A typical invoice might list the quantity of each item, prices, billable hours, service description and a contact address for payment. While some expenses may be paid out of a general fund or petty cash account, an invoice is usually paid through an accounts payable department by the posted due date
An invoice is a legal document which can be used as evidence of an incurred debt. The recipient of the goods or services can challenge the legitimacy of individual charges, but the invoice itself is considered a bona fide debt. Sometimes a vendor or serviceman cannot collect on a bill immediately, so their company will send an invoice at a later date for payment. The actual daily expense of a service may be so low that a company will simply wait for a larger invoice to cover all of the costs at once. Vending machine attendants and bottled water providers may only send one invoice a month instead of billing the company a few dollars a day for supplies.
Not all invoices are bills of sale, however. A manufacturer may send out a 'shipping invoice', which details all of the parts and accessories included in a particular order. This shipping invoice should be compared to the actual parts received by the store or customer. Car dealers also receive an invoice from the factory which details the actual price of the basic vehicle and any optional equipment installed. The dealer may offer a discount to the customer which seems to fall below the invoice price.
The use of an invoice as evidence of a legitimate debt can sometimes be abused. Unscrupulous companies may generate false invoices to account for missing funds or to inflate sales numbers to stockholders. An invoice is only enforceable and legal if corroborative evidence (inventory, duplicate bills, etc.) proves the goods actually exist or the service was actually performed. Companies and individuals do have the right to challenge suspicious invoices in a court of law.
Some companies who use invoices frequently will design their own forms, but generic invoice forms can be ordered at office supply stores. There are also computer programs available which can generate specialized invoice forms through the use of templates. A professional invoice should contain detailed information on the goods or services, clear and accurate prices and current contact information for any billing questions a client may have.