What is an invoice?
An invoice is an official document that certifies the sale of goods or services and serves as the basis for payment. It specifies what was provided, to whom, at what price, and under what tax conditions. In addition to its commercial function, the invoice also has accounting significance because it is part of the documentation upon which a business’s financial reporting is based.
In practice, the invoice is one of the most important documents in the relationship between the supplier and the recipient. It provides clarity regarding the transaction, facilitates the tracking of payments, and brings order to the workflow for both the business and the accounting department.
What does an invoice include?
To be issued correctly, every invoice must contain clearly structured information about the parties to the transaction, the delivery itself, and the amount due. A well-prepared document leaves no room for ambiguity and facilitates both processing and subsequent tracking.
Basic Information
A standard invoice typically includes several key elements, without which the document would not be complete or clear enough for business purposes.
Supplier and Recipient Information
The invoice must contain information about the issuing company and the recipient, including name and address. This information identifies the parties to the document and forms the basis for its proper accounting treatment.
EIK / VAT Number
The EIK is one of the company’s primary identifiers, and if the company is registered for VAT, the VAT number must also be included. Depending on the status of the parties to the transaction, this information is crucial for proper tax treatment.
Invoice Number and Date
Each invoice should have a unique number and date of issuance. This makes it easier to organize, track, and locate the document when needed.
Description of Goods or Services
The description must be clear, accurate, and specific enough to indicate what was delivered. It does not need to be overly long, but it must be understandable and unambiguous.
Quantity and unit price
When the invoice includes specific items, the quantity and unit price are specified. This makes the value of each delivery clearly visible and reduces the risk of confusion.
Total Amount and VAT Charged
The document must show the subtotal, the applicable VAT rate, the VAT charged, and the final amount due. This is an essential part of the invoice because it is here that the breakdown of the final amount is clearly shown.
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