An invoice is a commercial document issued by a seller to a buyer relating to a sale transaction and indicating the products, quantities, and agreed-upon prices for products or services the seller had provided the buyer. It is a time-stamped document that itemizes and records a transaction between a buyer and a seller. An invoice is generally used to document products or services sold and delivered to a customer, so it is a bill. It is a legally binding agreement showing both parties consent to the quoted price and payment conditions. An invoice can also serve as a paper trail for accounting purposes, and it helps both the seller and the buyer to keep track of their payments and amounts owed.
An invoice typically includes the following information:
- The quantity of any goods or services provided
- The rate charged
- The total cost
- A description of the transaction (so the customer knows what they’re paying for)
- When and how the customer should pay
Invoices differ from quotes. A quote provides an estimated cost, while an invoice shows the actual time taken and actual cost of a job or transaction. An invoice is also used to remind the customer that they haven’t paid yet, and it shows the customer when they should pay, which is called a payment term.
