What is an Invoice?

Definition: An invoice is a record of a sale or shipment made by a vendor to a customer that typically lists the customer’s name, items sold or shipped, sales price, and terms of the sale. In other words, it’s an itemized statement the reports the details of a sale for the buyer and seller’s records.

What Does Invoice Mean?

A typical invoice is printed on the letterhead of the vendor and includes a tracking number along with the customer’s account information. The purchase date; shipping terms, like FOB destination or FOB shipping point; ship date; and cash discount terms are usually printed on the top right of the note. The body of the report includes details of the purchase with product descriptions, quantities ordered, and total prices of shipment. The last thing included on most invoices is the name of the preparer.

Vendors usually refer to an invoice as a sales invoice because it records the sale made the customer. Customers, on the other hand, refer to this a purchase invoice because it records the goods that were bought from the seller.

Invoices are also used as bills that indicate the buyer owes money to the seller for a purchase transaction. Businesses that sell goods on account to customers often give them 30 days to pay for the goods. Let’s look at an example.


When a retailer purchases goods from a manufacturer, the goods are shipped to the retailer’s receiving department with an invoice sent to the retailer’s accounting department. This invoice acts like a bill indicating that the retailer still needs to pay for the goods it received from the manufacturer.

The invoice lists the amount of goods ordered and shipped along with the cash discount period and other terms of sale. The retailer’s accounting department then issues a payment to the manufacturer and includes a copy of the invoice, so the manufacturer can apply the payment to the proper purchase account.

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