Core invoice terms
These are the document types you will meet most often. They look similar and are easy to confuse, but each one plays a distinct role at a different point in a sale: quoting, demanding payment, correcting a mistake, or proving that money changed hands.
- Invoice
- A dated commercial document that records a supply and commonly requests payment. Its required contents and tax effect depend on the transaction and jurisdiction.
- Invoice number
- A reference that identifies an invoice. Some systems require a sequential number based on one or more series; the exact rule is jurisdiction-specific.
- Proforma invoice
- A proposed transaction or quotation in invoice form. It is generally not the final tax invoice, although its contractual, payment and customs use varies.
- Commercial invoice
- The seller’s record of an export sale and one of the main documents customs may use to value and clear sold goods. Destination-specific fields can apply.
- Credit note
- A document that records a reduction or cancellation of a previously issued invoice, for example after a return, an overcharge, or a discount. Its notation varies, and it should identify the original document it corrects.
- Receipt
- An acknowledgement that a stated payment was received. It may cover a deposit or part payment and does not always settle the full transaction.
Tax terms
Consumption-tax names and mechanics differ by country, and not every invoice carries tax. The table is a high-level orientation; registration, place of supply, exemptions and sector rules still need a local check.
| Tax | General model | Examples |
|---|---|---|
| VAT | Multi-stage tax with eligible input deduction | EU, UK and many others |
| GST | Often a VAT-style multi-stage tax | Australia, Canada, India, New Zealand |
| Sales tax | State and local transaction taxes, commonly at retail | United States |
- VAT (value-added tax)
- A consumption tax collected through stages of the supply chain. Registered businesses account for output VAT and may deduct eligible input VAT, subject to exemptions and restrictions.
- GST (goods and services tax)
- A value-added consumption tax used in countries such as Australia, Canada, India and New Zealand. It works much like VAT, taxing the value added at each stage.
- Sales tax
- A transaction tax common in the United States, usually collected on taxable retail sales. A business buyer is not automatically exempt; resale and other exemptions require the applicable conditions and evidence.
- Reverse charge
- A rule that makes the customer account for VAT instead of the supplier. Where it applies, the invoice follows the required no-charge treatment, identifiers and wording.
- VAT identification number
- An identifier used for VAT purposes and shown where invoicing rules require it. A valid number is evidence to check, not by itself proof that reverse charge applies.
- Tax point
- The date that decides which tax period and rate apply to a supply, also called the time of supply. It can differ from the invoice date or the payment date.
International trade terms
When goods cross a border, customs documents can require extra data for clearance, valuation and duty treatment. These terms describe delivery obligations, product classification, origin and value.
- Incoterms
- ICC trade rules such as EXW, FOB, DAP and DDP that allocate delivery tasks, costs and risk. They do not by themselves set price, payment terms or transfer of title.
- HS code
- A Harmonized System code: an international six-digit (often extended) tariff classification for a product. Customs uses it to set the duty rate and apply trade rules.
- EORI number
- An Economic Operators Registration and Identification number used by customs operators in the EU. Whether a party needs one depends on its role, establishment and customs activity.
- Country of origin
- The origin determined under the applicable wholly obtained or substantial-transformation rules, not simply the shipping country. It can affect duties, preferences and trade measures.
- Customs value
- The value determined under customs valuation law. Transaction value is the primary method for many sales, with required adjustments and alternative methods where it cannot be used.
Payment terms
Payment terms set out when and how an invoice should be paid, and what can happen if it is late. Agree the starting event and show the calendar due date. A free invoice generator can display the dates and terms you enter, but it does not decide the contract or mandatory payment-period rule.
- Net 30
- A 30-day credit term. The parties should define whether the period starts on invoice, receipt, delivery, acceptance or another event.
- Due date
- The calendar deadline for payment under the agreement and any mandatory law. Show it explicitly rather than relying only on shorthand.
- Late payment interest
- Interest that a contract or statute may allow on an overdue balance. EU rules provide rights for qualifying commercial transactions through national implementation; consumer debts are outside that regime.
- Remittance
- The act of sending payment for an invoice, and the details that accompany it. A remittance advice tells the seller which invoices a payment covers.
- Partial payment
- A payment that settles part of an invoice. The remaining balance stays open until it is paid or resolved through an authorised adjustment.
Compliance and format terms
Invoice rules can govern content, numbering, transmission format and retention. These terms cover sequential series, machine-readable data, record periods and the party details preserved on an issued document.
- Sequential numbering
- A rule in some tax systems that invoice identifiers advance within one or more defined series. Preserve the records that explain cancellations, corrections and series boundaries.
- E-invoicing
- Issuing invoice data in a structured, machine-readable format that receiving systems can process. XML formats such as UBL and CII are common, but mandates define the accepted syntax, network and clearance process.
- Retention period
- The period for which applicable tax, accounting or company law requires readable invoice and supporting records. Both the duration and starting event vary.
- Buyer/seller snapshot
- The party details preserved with the issued invoice. Later profile edits should not silently rewrite the historical issued record; use the correction process that applies.
Invoicing terms questions
What is the difference between an invoice and a receipt?
An invoice records what is billed and often requests payment. A receipt acknowledges an amount received, including a deposit or part payment. Their timing can vary, and one paid document can combine both functions where the rules allow it.
What does net 30 mean on an invoice?
Net 30 describes a 30-day credit period, but the label alone does not define the starting event. State whether it runs from invoice, receipt, delivery, acceptance or another agreed event, and print the resulting calendar due date.
What is a credit note?
A credit note reduces or cancels all or part of an issued invoice, for example after a return, overcharge or post-sale discount. It references the original so the adjustment is traceable. Follow the jurisdiction's correction method, since some systems prescribe additional documents or clearance steps.
What is the reverse charge on an invoice?
The reverse charge makes the customer account for VAT instead of the supplier. It applies to specified domestic or cross-border supplies, not all B2B transactions. Where it applies, use the tax treatment, identifiers and invoice wording required by that regime.
Why must invoice numbers be sequential?
Some tax systems require a sequential number based on one or more series so each invoice is uniquely identifiable. A controlled series makes omissions and duplicates easier to investigate, but the treatment of gaps, resets and separate series comes from local rules.
What is e-invoicing?
E-invoicing sends structured invoice data that receiving systems can process. UBL and CII are common XML syntaxes, but a mandate can specify another format, network, reporting model or clearance platform. A PDF alone is not a structured e-invoice.