How to read a supplier invoice
There is no set way a supplier invoice must be set out; they just need to have certain information set on the page.
If you have ever worked in finance, you would know the struggle of getting use to processing a supplier invoice, only for the next one to be completely different & for that to throw you off routine - especially if it is a scribbled note on a scrunched-up piece of paper with hardly any information scanned in as a pdf…
Below is a couple of examples of supplier invoices & their differences - & there is a few.
As you can see supplier Invoices can be landscape or portrait
Invoices haven’t really changed much over time.
What needs to be on a supplier invoice?
There are 6 key parts of an invoice & there are no standardized layouts for this information.
- Invoice number
- Description of supplies & services rendered
- Payment terms
- Date of invoice
- Business contact information
- Amount owed
What is an invoice number & what is it used for?
The Invoice number can appear in any location on the supplier invoice but is commonly placed in the upper corner on the right-hand side.
An invoice number is a unique code that is assigned to the invoice for clear identification for tax & accounting records.
Most invoice numbers are assigned sequentially, meaning new invoices will always have higher numbers than older invoices. Invoices numbers create a “paper trail” allowing it to be easily tracked, especially if the invoices are not paid right away
What are line items on a suppler invoice?
On most invoices - usually in boxes but not all the time - are lines of goods purchased, known as line items.
On each line you will get product description, quantity, & price of goods.
At the bottom of the list of line items is a sub total of all costs as well as an area for tax charges on items &, lastly, the final amount that is due.
What are payment terms?
Terms of payment are conditions that a buyer accepts of which they must be met.
The conditions are normally around the payment period, ranging from 30, 60, 90 days or more. Each company has their own payment terms, & it is not standardized.
Why is the date on an invoice important?
The position of the date on the supplier invoice moves often but is easily identified & is an especially important piece of information.
The date on the invoice is the suppliers record of the transaction & is the date the supplier bills their customer. The date is so important as it is a timer & indicates the start of the invoice payment due date.
What business information needs to be on a supplier invoice?
Business information is used to be able to identify who, what, & where; but more importantly to supply contact details if there are any inquiries about invoices.
It is not uncommon to have both sets of business information from the supplier & buyer.
The business contact information includes address, name, email, phone number.
Business contact information sometimes appears in the header but commonly both companies' business details appear above the list of supplies next to each other.
The amount owed on an invoice.
This is simple, this is the cost of the supplies/services plus/minus tax & discounts that are owed & need to be paid.
What needs to be on a vat registered supplier invoice?
Only VAT registered businesses can use VAT Supplier invoices & it is only compulsory to do so if the buyer is also VAT registered.
- A unique, sequential invoice number
- Your business names
- Your registered address
- Your VAT number
- An issue date
- A date of supply
- Your customer’s name & address
- A description of the goods or services provided
- The price per item (not including VAT)
- The rate of VAT charged per item
- The quantity of each item
- Any discounts applied to each item
- The total amount due (not including VAT)
- The total amount of VAT due
For more information on VAT invoices, check out this link for more VAT record keeping: VAT invoices - GOV.UK (www.gov.uk)
What is the difference between an invoice & an e-invoice?
An invoice is a record document of a transaction of itemized goods from a supplier to the buyer. An invoice notifies the buyer of costs owed to the supplier & is normally delivered with supplier or after delivery.
An e-invoice is an invoice that is issued, transmitted, & received in a structured way. E-invoicing requires two key criteria, one needs to be created in correct structure & two, it must be transferred from the seller's systems to the buyers.
Structured data is a machine-readable format issued in electronic Data interchange (EDI) or XML formats. This information is readable by your accounting system & does not require visual presentation of an invoice as the data is directly read by the invoice system.
What is not an e-invoice
An e-invoice is not unstructured invoice data such as PDF or Word formats, photos or image files like JPG or tiff, scanned paper images (OCR), invoices sent as fax or unstructured html invoices on a web page or email.
If you are looking to capture the data of your supplier invoices, then Compleat Digital Invoice Capture may be the perfect solution for you. Click here to learn more about the solutions, benefits & technology to simplify the way you buy, pay & save.