Creating an invoice for your business transactions as a business owner or sole proprietor of a small business should be among the very first thing to do, while setting up a business structure.
Fortunately, this applies to both online and offline businesses because creating an invoice for your transactions and keeping the record is one of the major buying and selling strategy that a lot of small business start-up entrepreneurs & owners normally forget to do.
Today am going to show you the purpose of an Invoice in business transactions.
But before i continue, do you know that in Nigerian secondary schools students in Junior secondary 3 normally treat this topic on business studies?
Do you also know that having or creating an invoice for your business averts unnecessary debts from your customers who patronize you on daily basis? (This is to say that having a business invoice will go a long way to make your customer's not to owe you, this is because an invoice shows accountability of the number of goods being purchased).
What is an Invoice?
In a lay man understanding, an Invoice is a simple paper that comes inform of a receipt but does not serve as receipt because an invoice bears a lot of things that differentiates it from being a receipt.
In an invoice we have the order number and date that shows when the business deal and transactions were striked.
An invoice will give and must bear the total price and a price unit of what was being purchased.
Its only in an invoice you get to see a discount on goods you buy, if there is any.
An invoice shows the total quantity and as well as describing the nature of goods being purchased.
Invoice shows the net amount that can be payable.
And least i forget, business invoice must show or bear the terms and conditions of home delivery services.
Having seen the difference between an Invoice and a receipt, we are now going to take a look on types of invoice before we now look at the main purpose of an invoice.
You might be wondering why am taking my whole time to write on this.
As a small business owner it's for your own good as it will go a long way to help you to know the type of invoice you would need for your business transactions with your customers.
Types of an Invoice
These are the types of Invoice that you need to know, this includes;
Pro forma invoice
Local Purchase Order &
Statement of Accounts
Pro Forma Invoice
Pro Forma Invoice is the type of an Invoice that is been sent in advance before releasing the goods to the buyer.
This type of invoice also bears the amount which the seller would be offering the buyer on the service about to be rendered.
A lot of online platforms who are into the business of buying and selling normally use this type of an Invoice.
Benefits of using a Pro forma invoice
A pro forma invoice is a polite way of asking for the payments of your goods and services before you can render or deliver them.
A pro forma invoice unlike other types of Invoice can be sent along with the goods and services in demand. And if the customer who is known as the buyer can't afford it then the goods will be sent back but if he pays, he or she must pay in full.
A pro forma invoice also helps in showing the worth of a goods imported from other countries - this is because the worth of the goods will determine the appropriate custom charges.
A pro forma invoice shows the proce
