What Is a Vendor Invoice?
Vendor Invoice: A Basic Introduction To It
The vendor invoice is a document that lists the total amount a supplier is owing and is listed by the recipient. An invoice is always generated and issued to the customers when they place orders for goods and services unpaid.
The necessary information included in a vendor invoice is the amount owed, delivery fee, applicable tax, accepted payment methods, and the date of payment.
Upon receiving the invoice, the customer includes the invoice into their company’s financial records or into accounting software to schedule the payment.
10 Invoice Terms to Get Familiar With
Terms Of Sale
Terms of sales are the payment terms agreed upon by the vendor and customer. The payment terms include delivery, the amount payable, due date, payment methods, and cost.
It is the agreed terms made between a vendor and the company. The terms give clarity to all requirements for the sales to go through smoothly.
For international trade, terms of sales are taken seriously because they cover information concerning the transportation of the goods and when they will be transported. They also include contacts that are responsible for taxes and international duties, as well as other established factors by international commerce regulations.
Payment In Advance
Payment in advance refers to the amount paid ahead of time. Some business owners demand upfront payment before supplying their goods and services.
Take a freelancer, for example, he or she can demand a 40 percent advance payment before starting on the job. Advance payments help to cover expenses during the jobs as well as helping vendors recover a part payment.
Immediate payment is also known as “Cash On Delivery” (COD). It signifies that payment has to be made at the time of delivering the goods. When a customer fails to make an immediate payment after being agreed upon by them and the vendor, maybe by credit card, bank transfer, wire transfer, online payment, or e-check, the vendor retains the full right of repossessing the goods. Immediate payment can also be called “Payable on Receipt.”
Net 7, 10, 30, 60, 90
This term is known as the net payment due in any written number. The number signifies the number of days after the invoice date.
For instance, if an invoice is issued and dated on September 5 and the vendor states in the payment terms “Net 30”, the payment will be due 30 days after September 5 which is October 5.
Sometimes this term confuses the customer and the company’s accounts payable section. As a vendor, you are advised to use a clear term like “Days” instead of “Net.”
2/10 Net 30
Since Net 30 means the customer has to pay on or before 30 days, some companies often give discounts to payments made early. The vendor may state in the payment terms that a 2 percent discount applies if payment is made within ten days.
These terms can change depending on how the vendor chooses. They may give a 5 percent discount if payment is made within a week.
Line Of Credit Pay
This means the customer can pay their bills given some days. The days extend on a quarterly or monthly basis. Line of credit pay also means the customer can order goods or services on credit. This practice is often common among larger companies because small businesses cannot decrease cash flow like them.
Quotes and Estimates
Quotes and estimates mean a certain figure given to the customer by a vendor or company for the prices of their products and services. With it, customers can compare the prices with that of other competitors.
Quotes and estimates do not mean the total amount the customer has to pay; It should be detailed just like the invoice.
You can convert quotes and estimation into an invoice when the sale has been made, and the prices have been agreed upon.
Recurring invoices are invoices generated for services that are continuous, for example, housecleaning, web hosting services. These businesses don’t change the price every time.
Recurring invoices guarantee constant cash flow to the business and are void of disputes and the task of reminding customers for payment.
Interest invoices affect those customers who make late payments. For these customers, they delay payments and incur interests on late payments as the days increase on the payment due date.
Interest invoices also include the date when payment has to be made.
Invoice factoring is a considered option when the customer or company fails to make payment after it is overdue. During the period, you may need money in the business and have no option than to hand the invoice to an invoice factoring company. You’ll get up to 90 percent of the total amount in advance but will later get charged for their services.