An invoice is a document given to the buyer by the seller to collect payment. It includes the cost of the products purchased or services rendered to the buyer. Invoices can also serve as legal records, if they contain the names of the seller and client, description and price of goods or services, and the terms of payment.
Evolution of invoices
Stone invoices
Invoices and records of transactions were made as early as 5000 BC in Mesopotamia. The merchants used to carve details of transactions on clay or stone tablets using the earliest form of math.
Hand-written invoices
Invoicing later evolved to hand-written invoices on animal skin, parchment, or paper. These invoices contained most of the elements of a modern invoice and used signatures or seals.
Electronic invoices
The invention of computers brought about the next big change in invoicing. This revolution was triggered by the desire to reduce traditional costs and labor. Invoicing became cheaper, easier, and faster with electronic invoices.
Online invoices
The advent of the internet led to better, more secure, more green ways to communicate with clients. Online invoices are paperless as the invoices are sent through email, and payments are made online.
Mobile invoices
Invoicing in the modern world has gone mobile. Specialized SaaS (Software as a Service) companies ensure that invoicing is now automated, secure, and instant, so you can invoice on the move.
Functions of invoices
Companies need to deliver invoices in order to demand payments. An invoice is a legally binding agreement showing both parties’ consent to the quoted price and payment conditions. However, there are other benefits to using invoices.
- Maintaining records
The most important benefit of an invoice is the ability to keep a legal record of the sale. This makes it possible to find out when a good was sold, who bought it, and who sold it. - Payment tracking
An invoice is an invaluable tool for accounting. It helps both the seller and the buyer to keep track of their payments and amounts owed. - Legal protection
A proper invoice is legal proof of an agreement between the buyer and seller on a set price. It protects the merchant from fraudulent lawsuits. - Easy tax filing
Recording and maintaining all sale invoices helps the company report its income and ensure that it’s paid the proper amount of taxes. - Business analytics
Analyzing invoices can help businesses gather information from their customers’ buying patterns and identify trends, popular products, peak buying times, and more. This helps to develop effective marketing strategies.
Tips for invoicing
Here are some tips to help you make the best use of your invoices and ensure that you get paid promptly:
- Incentivize on-time or early invoice payments
- Make the invoice and payment process more convenient for customers
- Use recurring invoicing, if applicable
- Negotiate and establish payment terms in writing
- Get upfront payments
- Automate invoicing
- Work on creating closer relationships with clients
- Hold the work or stop projects if a client doesn’t pay on time
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