What is an invoice?
An invoice is a document a seller sends to a customer to record goods or services supplied and request payment. It identifies the parties, describes the transaction, and states how much is payable and when. An invoice is different from a receipt: a receipt confirms that a payment has been received.
When should you issue an invoice?
Businesses commonly issue invoices after delivering goods, completing a service, or reaching an agreed project milestone. Some agreements require an advance or deposit invoice before work begins. Agree on the timing with your customer and follow any applicable local tax or invoicing rules.
Example: A furniture supplier delivers ten office chairs to a client on 8 October. If the agreed terms are payment within 14 days of invoicing, the supplier can issue an invoice dated 8 October with a due date of 22 October, provided that matches the contract.
What should an invoice include?
- Seller details: Business name and a suitable contact address or email.
- Customer details: Name of the person or business being billed and relevant contact information.
- Invoice identification: A clear invoice number and issue date.
- Goods or services: Item descriptions, quantities, units, prices, and line totals.
- Amounts: Subtotal, any discounts, applicable taxes or additional charges, and the final amount due.
- Payment information: Currency, due date, agreed payment terms, and suitable payment instructions.
- Optional references: Purchase order number, delivery reference, or a note explaining the work.
Some countries require additional information, such as a tax registration number or specific tax wording. A general invoice template may not satisfy every jurisdiction's legal requirements.
Worked example: an invoice for office chairs
Imagine a supplier bills a business customer for ten office chairs at $120 each. The customer receives a 5% discount, and this hypothetical transaction has a 10% tax applied after the discount.
| Calculation | Amount |
|---|---|
| 10 chairs × $120 | $1,200.00 |
| Discount (5% of $1,200) | −$60.00 |
| Amount after discount | $1,140.00 |
| Illustrative tax (10% of $1,140) | $114.00 |
| Total payable | $1,254.00 |
How to check the math: Multiply quantity by unit price to get the line total. Subtract the discount, calculate any applicable tax on the correct taxable amount, then add permitted charges. Tax treatment and the order of calculations can vary by jurisdiction and transaction.
Payment terms and due dates
Payment terms tell the customer when and how to pay. For example, “Due within 14 days” means the customer should pay by the stated due date; “Due on receipt” requests payment when the invoice is received. If you offer bank transfer, include only the payment details the customer needs and verify them carefully.
Use a specific calendar due date whenever possible. If a deposit has already been paid, make the remaining balance clear so the customer does not accidentally pay twice.
How invoices fit into the sales process
A quotation can propose prices before the customer agrees to buy. A delivery note can record physical goods delivered. An invoice requests payment under the agreed terms, and a receipt can confirm payment afterward. Not every transaction needs all four documents.
Common invoicing mistakes to avoid
- Unclear descriptions: Write “10 ergonomic office chairs” instead of only “chairs.”
- Incorrect totals: Recheck quantities, discounts, tax, and rounding before sending.
- Missing due date: State a specific payment deadline when one is agreed.
- Wrong customer details: Verify the legal or trading name and billing contact.
- Duplicate invoice numbers: Use a consistent reference system to make records easier to find.
- Missing records: Keep a copy of the invoice and note whether it has been paid.
How to create an invoice with BizDoc Maker
- Open the Invoice Generator.
- Enter your business details and the customer's billing information.
- Set an invoice number, invoice date, and payment due date.
- Add each product or service, its quantity, and price.
- Review any discounts, taxes, totals, and payment terms.
- Check the live preview, then use the available print or PDF option to keep or share a copy.
Review the completed document before sending it. If your business is subject to special invoicing or tax rules, check that the document includes all required fields.
Frequently asked questions
Is an invoice proof of payment?
No. An invoice generally records an amount charged or due. A receipt or payment confirmation is used to document that payment was received.
Can I issue an invoice before delivery?
Sometimes. Deposits, subscriptions, and milestone-based projects may involve invoicing before final delivery. The agreement and local rules determine what is appropriate.
Does every invoice need tax?
No. Whether tax applies depends on the seller, customer, goods or services, and relevant jurisdiction. Do not add a tax rate simply because it appears in an example.
Can I change an invoice after sending it?
If an invoice has already been issued, changing it may require a documented correction or credit note, depending on local rules and the circumstances. Keep a clear record of any correction.
Ready to create one?
Use BizDoc Maker to prepare a clean business document and print or save it as PDF.
Make InvoiceNote: Document requirements can vary by country, industry and transaction. Use these guides as general business information and check applicable local requirements when necessary.