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Essential Elements of Sales Invoice

Invoice is necessary for every business as you need it if you are selling and purchasing some goods or services. Every company or business is required to keep it in records. This is the reason it is considered an important document.

Some important elements need to be included in every invoice. But one should take care that every invoice must be complete but easy to understand. Let’s discuss in detail what all should form a part of every invoice:

A proper header and business logo

These two items will come on the top of every invoice. Try to use the market pattern in your place of business and in your industry. Label the document with the proper name at the top with a big font size to make it clear to others. It will avoid confusion as many other documents need to be kept in record for every business.

Also, include a logo that belongs to your business. It will make the document professional as well as presentable. The logo image should be of the right size as it will be easier for the client to remember you.

Start using TaxAdda Invoicing Online Software for creating a perfect invoice.

Unique invoice number

Every business issues lot of invoices daily so there should be a unique number that will be used to recognize the invoice identity. You can search for a particular invoice through its unique number only.

As per GST act, you can use a alphanumeric series which may contain slash (/) or hypen (-) and should not be more than 16 character in lenght. You can use one or more series but it should be issued in chronological order. Also, you can start a new series in a new financial year or you can restart from 1.

Company Information

At the top of every invoice company information or you can say sender of the invoice information should be mentioned. It includes the legal name of the company, company address, email address, phone number, fax number, etc. It will help in differentiating between seller and purchaser.

Another piece of information that needs to be mentioned mandatorily is the GSTIN number if registered under GST. It has become mandatory under GST law that the GSTIN number should be mentioned on the invoice as well on the office board outside the office premises.

Purchaser information

The person to whom the invoice is issued is the payer. You need to mention the payer’s information too in the invoice. It includes its legal name, email, GSTIN, phone number, PAN, address, etc. In case you are sending an invoice to multiple departments of the same company like in government companies, you can mention the department also to make things clear. It will help in differentiating later on as to which department payment is pending.

Goods or services description

The goods or services that are being sold should be mentioned in detail on the invoice. The product or service name, its price, quantity of product or service sold, and its total value. All the goods or services should be separately mentioned to avoid confusion. It will help in keeping track of stock as you will know which item is in the stock and which is sold. You can even include other details related to the product but keep them in the sold section to avoid confusion.

Taxes information

There may be different fees or taxes such as GST, freight etc. that are applied to the items sold. You can include such fees and taxes near the price column so that it will be shown as added to the amount due and linked to the total amount due field. The total amount due is the most obvious column that depicts the amount to be collected from the customer. It will make clear to the customer that he needs to pay this amount in exchange for the purchase of the goods against this invoice. All taxes, fees, and the total due amount should come in the separate rows or columns. It will avoid mistakes as every amount will be separately added to the total amount.

Terms and conditions

Some certain terms and conditions need to be mentioned in the invoice to avoid misunderstandings later on. It includes statements related to taxes, payment-related terms, return policies, interest on late payments, etc. All these terms should be mentioned at the bottom of the invoice to make things clear to the customer. By mentioning these terms and conditions in the invoice, the customer becomes binding to them and he cannot deny afterward. Though it is not compulsory to mention these terms on the invoice usually it is a good idea to make things simple.

A declaration can also be made regarding the quality of the product as it will increase the confidence of the customer in the product or service you are selling.

The due date can also be mentioned if you are strictly following the credit terms. It will serve as a reminder to the customer that he is bound to make the payment before this date.

View our completed guide on invoicing terms and conditions.

Bank details and unique message

These days bank details are also mentioned on the invoices to make it easy while transferring the payments. Most payments are made digitally in every business. The customer can easily pick the details from the invoice and add them as a beneficiary. There will be fewer chances of mistakes as account numbers, IFSC code, and other bank details are mentioned.

While laying out the business invoice, make sure that these basic items are included in it to make it an effective invoice. It should be thoroughly checked before finalizing it. The invoice should look professional and only relevant information should be included.

Prateek Agarwal

I am Practicing Chartered Accountant from Jaipur and in practice for more than 9 years. I writes mainly for GST and Finance.

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