An Ultimate Guide On Sales Invoice 

As a customer, you may avoid accepting invoices in shopping malls, restaurants, or grocery stores; now that you are a business owner, you should always pay attention to the importance of a sales invoice. In this blog, we will discuss what a sales invoice is, the significance of sales invoices and how to create sales invoices for your company. 

What is a Sales invoice? 

A sales invoice is a document that comes under the purview of accounting. It is prepared by the seller of goods or services and sent to the customer. This document records details of services/products purchased, the amount they owe, and the mode of payment. In addition to serving as a request for payment, a sales invoice also acts as proof of supply. This means that if there is a dispute or legal issue regarding the supply of goods or services, the sales invoice can be used as evidence to prove that the supply was made.  

Significance of Sales Invoice 

A sales invoice’s primary role is to seek customer payment against the goods or services. Apart from that, there are several other functions that you should be aware of, which are as follows: 

Easier Loan Approval 

To get loan approval from banks or NBFCs, you need a proper business plan. To make a business plan, you need correctly managed and verified books of accounts. Your books of accounts will be correct only when you maintain accurate records of sales invoices. 

Filing GST 

To file GST returns you need to maintain a proper record of sales invoices. The record allows you to calculate the amount of tax you owe to the government. In case of an inquiry, you can furnish invoice records to prove yourself innocent.  

Sales Forecasting 

With the advancement of technology, businesses are now in a position to forecast their sales. This forecasting gives you an approximate idea of revenue, thereby allowing you to do capacity planning, manage inventory and order purchases beforehand. Note that the forecasting results will be accurate, and proper invoice records will be maintained. 

Additionally, by analyzing records of sales invoices for a considerable duration, you can get insights into the least and the most popular products, identify peak sales time and understand revenue trends. All these insights are valuable resources for making your business more profitable. 

Inventory Management

A well-kept invoicing record helps you keep track of consumed inventories, based on which you can calculate the inventory in the warehouse. Now, by keeping a note of sales forecasts and inventory in the store, you can plan your purchases. 

How to Create a Sales Invoice 

Following are the steps to create a sales invoice: 

Choose a Template

Choosing a relevant sales invoice template is not easy. The internet is full of such templates, but finding one that is relevant to your business is like finding a needle in a haystack. 

The idea behind choosing a template is to standardize the format and the process faster. 

Quick Tip: “format: docx; Free customizable invoice template for [Your business category]”—Write your business category and search it on Google. We are sure you will find an invoice template for your business quickly.  

Customize the Template 

After downloading the template, you should use this template directly. To make it professional you need to remove the watermark or url firstly (if any) and then paste your brand logo on the top. Mention other important business details like GSTN, address, phone number and email address. 

You are ready to start once you are done providing all the details. 

Create an Invoice 

To create an invoice, you need to provide client details such as name, address, phone number and GSTN (if the consignment is B2B). Then comes, product/service particulars, quantity, price, tax, discount (if applicable), and lastly the grand total. 

Once you have mentioned the above information, comes the payment information; here, you have to mention the mode of payment, the payment due date, and the payment terms. 

Types of Sales Invoice 

There are four main types of sales invoices for business transactions, which are as follows: 

Standard Invoice 

The standard sales invoice is the simplest and most frequently used. It contains only basic business information and has a few customization options, depending on the business’s nature. 

Pro-forma Invoice 

A pro forma invoice is sent to the customer before the sale of goods or services is rendered. It states all the details regarding the products or services, price, and especially the payment terms and conditions. The purpose of this invoice is to make the customer aware of the price and other terms and conditions. 

Recurring Invoice 

Recurring invoices are employed when a customer purchases goods or services at a regular time interval. Often, the order is placed under a subscription. To generate such invoices, you can automate the creation and sending of your accounting software to the customer. 

Commercial Invoice 

The purpose of a commercial invoice is to facilitate international trade documentation. Since this invoice is made for international use, it is a bit complicated to draft as it contains customs details. Apart from the information that a standard invoice contains, this document furnishes information on product weight, freight cost, and country of origin. 

Over To You

So this is all about sales invoices. We hope after reading this blog, you understand the purpose of sales invoices and learn how to create sales invoices for your company. One more thing we want to inform you about is free billing software; it would be best if you create invoices in Munim – Free billing software rather than using a template. 

Frequently Asked Questions on Sales Invoice 

Can the invoice be paid later? 

Ans. Yes, an invoice can be paid later, provided that it is permitted under the payment terms and conditions. If the payment is delayed beyond the mentioned due date, penalty charges will be levied as per the payment terms and conditions. 

What is the difference between an invoice and a sales invoice?

Ans. The role of a purchase invoice is to track a company’s expenses and cash outflow. A sales invoice is sent by the seller to the purchaser stating the amount to be paid and payment terms and conditions.