Invoice
Definition:
An invoice is a commercial document issued by a seller to a buyer, detailing the products or services provided, the quantities, prices, payment terms, and other relevant information. It serves as a request for payment and a record of the transaction between the parties.
Example:
Steel Suppliers Inc. sends an invoice to Acme Corporation for a shipment of 500 tons of steel plates. The invoice includes the product descriptions, quantities, unit prices, total amount due, payment due date, and payment instructions. Acme Corporation's accounts payable team uses the invoice to verify the details against the corresponding purchase order and goods receipt, and then processes the payment according to the terms stated on the invoice.
Why is an invoice important to Procurement?:
Invoices are important to procurement teams as they provide a formal record of the goods or services purchased, the agreed-upon prices, and the payment terms. They serve as the basis for verifying the accuracy of the transaction, reconciling with purchase orders and goods receipts, and processing payments to suppliers. Invoices also play a critical role in financial reporting, budgeting, and auditing, as they document the organization's expenditures and liabilities. Moreover, invoices are often used to track supplier performance, monitor spend patterns, and identify opportunities for cost savings or process improvements.