Understanding Invoices: Functions, Components, Types, and E-Invoices

Understanding Invoices Functions, Components, Types, and E-Invoices

Nikereact.orgIn the transaction process, especially in the sale and purchase of valuable goods, of course there will be important documents that prove the existence of the transaction. Keep in mind again that the existence of this invoice is only for buying and selling valuable goods, so if you make a vegetable sale and purchase transaction at the market, you will not get an invoice as proof.

Invoices are almost the same as receipts, the difference is that the invoice is proof of the transaction while the receipt is proof of receipt of money from the buyer to the seller.

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The use of this invoice is usually found in trading companies that have a credit sales system. In this case, the invoice can function as a proof of debt document or a credit sale transaction between the buyer and seller.

So what exactly is an invoice? What are the types of invoices in this trading world? Let’s look at the following review so that  understands it!

Understanding Invoice

Understanding Invoices Functions, Components, Types, and E-Invoices

According to the KBBI (Big Indonesian Dictionary), an invoice is a list of consigned goods accompanied by a description of the name, amount, and price to be paid. Meanwhile, according to Mulyadi, this invoice or invoice is a business document used in business transactions, and can affect the efficiency and effectiveness of transaction activities.

Actually, an invoice is the same as an invoice, it’s just that “invoice” sounds foreign.

Furthermore, according to Sugeng Hariyanto, an invoice or invoice is a record that describes what goods will be sent to the buyer along with the price.

Well, based on some of these definitions, it can be concluded that an invoice is an important written document that contains buying and selling transactions in the business world. Usually, this invoice is made in triplicate. The first copy is the archive of the company that has the sales system, the second copy is for the buyer, while the third copy can be used as a financial archive.

Invoice Functions in the Business World

Previously, it was written that invoices are important documents related to buying and selling transactions, especially those using the credit system. Therefore, invoices of course have many functions, especially in the business world.

  • As legal evidence when you want to add transactions to the financial books
  • Become proof of a valid reference source if the related goods or services are to be resold to other parties
  • As a valid report for goods receipts and tax invoices
  • As a guardian of legal certainty, especially for the seller and buyer
  • As a repository for financial or sales records. This is because the invoice has complete information about the buyer and the goods purchased
  • As an analysis material to see consumer buying patterns, so that it can be used as a promotional reference in the future

Invoice Functions for Companies

The existence of an invoice is actually an important document that should not be omitted by the company, because it can be evidence that the sale and purchase transaction has been carried out previously. Well, here is the invoice function for the company.

  • As information regarding the amount of bill payments that must be made by the buyer
  • As information on goods or services provided to the buyer
  • As a reference basis, if there is an error in the sale transaction, especially in calculating the total bill

Basic Components of an Invoice or Invoice

The invoice is an important document that can be evidence of a transaction, therefore there must be several special components, so that it can be considered a valid document. The following are the basic components that must be included in an invoice or invoice.

1. Written as “INVOICE”

As with other important documents, at the top there must be a clear identification of the document. Therefore, at the top and the front, the words “FAKTUR” or “INVOICE” must be written so that readers can understand that the document is an invoice.

2. Invoice Number

The existence of this invoice number is actually almost the same as other important documents. On the invoice, this invoice number is a unique number code and is not used arbitrarily, because it can be used as a reference, both to internal and external parties of the company concerned.

3. Seller Information

Previously, it was written that the invoice is an important document that contains buying and selling transactions with a credit system, so that clear and detailed seller information is required. This is to minimize errors related to bills and when confirming with the buyer it will be easy.

4. Invoice Date

The date stated on the invoice indicates the time when the sale and purchase transaction took place and is officially recorded. Not only that, the invoice date also plays an important role in determining the payment due date.

Usually, the buyer will be given a deadline from the time he first received the invoice until he had to pay off the bill.

5. Payment Terms

Not only the nominal amount of payment contained in an invoice, but also with the terms of payment. Even if there is a discount or rebate, it will also be included in this invoice. This includes down payments that may have been paid up to the amount of the fine (if you are late paying the bill).

6. Product Details

It should be remembered again that an invoice is an important document that contains a sale and purchase transaction with a credit system, therefore this invoice can also be used as a collection tool.

Therefore, the invoice must contain clear product details, be it product price per unit, number of products purchased, handling fees, shipping costs, to tax costs for the product.

Invoice Types

This invoice document or invoice has several types. Generally, all of these types are often used by entrepreneurs and business people (both class or middle class) for their buying and selling transactions. The following are the types of invoices:

Based on the Appearance

1. Regular Invoice or Invoice

This type of invoice is the most common debt collection document. Usually used in simple product buying and selling transactions. Therefore, the display looks simple, sometimes it even only contains the name of the product and the selling price.

2. Invoice or Proforma Invoice

This type of invoice or invoice is usually called a temporary invoice. This is because this pro forma invoice document will be given when the product supply is still not finished.

Therefore, later this invoice will be given to the buyer in stages, or as temporary evidence to show that the product has been shipped.

3. Consular Invoice or Invoice

This type of invoice or invoice is the most exclusive, because it will also include proof of upscale buying and selling transactions, namely between countries. The transactions that most often use this type of invoice are export and import transactions, because they are buying and selling transactions between countries, which of course should not be arbitrary.

Even in this invoice document or consular invoice there must be written approval from the trade attaché of the country (embassy) that transacts.

Based on the Parties concerned

1. Sales Invoice (Sales Invoice)

A sales invoice is proof of a bill issued by the seller (usually an entrepreneur) to the buyer (consumer) for the purchase of a number of products (either goods or services). Usually, this type of invoice will be given after the product has been received by the consumer.

This sales invoice or sales invoice will later contain detailed information regarding the type of product (goods or service) purchased, the number of purchases, discounts obtained by consumers (if any), and the nominal price to be paid.

Therefore, the existence of this sales invoice can be a form of agreement in the process of buying and selling transaction activities, including the time lag given by the seller from the fulfillment of the product order until the time of payment.

Then, is this sales invoice very important, especially in the business world? Of course yes, here are some important functions of the existence of a sales invoice.

  • As evidence of valid tax reporting
  • As billing information that must be completed by the buyer
  • As a basis for submitting complaints by buyers
  • As written evidence regarding the quantity and price of the product that has been purchased
  • As a reference document, especially when the product will be resold to other parties
  • As a tool to track products that have been sold along with the time and amount of the transaction nominal

2. Purchase Invoice (Purchase Invoice)

If there is a sales invoice, it must also be a purchase invoice because in the transaction there must be two parties, namely the seller and the buyer. As a buyer or consumer, you will not issue a purchase invoice, because it has been taken care of by the producer or seller.

Purchase invoice is an invoice document that will be received by the consumer or buyer, which comes from the producer or seller. Simply put, this purchase invoice is proof that you have purchased a product from the seller.

Please note, that Purchase Invoice and Purchase Order are different, right?

The purchase order is a document sent by the buyer to the seller, when they want to order an item or service produced by the seller. In this purchase order document, there will be details of the order, delivery date, and the price of the goods or services.

If a flow is made, the buyer will create a Purchase Order (PO) and send it to the seller. After that, the seller will confirm the existence of the Purchase Order (PO) and immediately prepare a product order based on the Purchase Order (PO) document.

Similar to sales invoices, this type of invoice also has many functions, especially for the consumer, namely:

  • As written evidence that the product (goods or service) has been purchased and is in accordance with the order
  • As valid evidence if the product will be resold to other parties
  • For billing information and payment terms that must be paid by the buyer
  • As proof of complaint if there are products that are not in accordance with the Purchase Order

Know What is an Electronic Invoice (E-Invoice)

In today’s sophisticated era, of course, invoices can be in electronic form. Similar to the National Identity Card (KTP) which has been converted into an e-KTP, the invoice also becomes an electronic invoice or e-Invoice.

This electronic invoice has the same function as an invoice in the form of a physical document, the difference is only in its form.

Electronic invoice can be defined as a means of electronic transfer, with information in the form of billing and payment information between business partners. This e-invoice system usually also has a digital signature to increase the validation of the existence of the electronic invoice.

Seeing the era that is completely digital, even money which incidentally is a means of exchange is also in digital form, this e-invoice is also equipped with a QR Code. QR Code (Quick Response Code) is a two-dimensional symbol that can only be interpreted by a scanner.

Example of Using Electronic Invoice (E-Invoice)

Please note that the invoice is not only used in product sales transactions, but also in tax payments. Currently, tax invoices in electronic form have been developed and are widely used by the public in paying their taxes to the Directorate General of Taxes.

The emergence of this electronic tax invoice was because in 2008-2013, there were approximately 100 cases of fraudulent tax invoices. From this case, of course, it cost the state around Rp. 1.5 trillion. On that basis, the government then issued an innovation, namely the e-invoice application.

Interestingly, there are two reasons behind the Directorate General of Taxes as the institution that administers taxes to determine this e-tax invoice so that it becomes part of the VAT administration system in Indonesia. The background is the abuse of the authority of PKP and Tax Invoices; and the ever-increasing burden of tax invoice administration.

Even though this is a new breakthrough in terms of invoices, this e-tax invoice is also regulated by a legal basis, you know… One of them is the Regulation of the Director General of Taxes Number 17/PJ/2014 concerning the Shape, Size, Procedure for Filling Out Information, Notification Procedures for Making, Procedure for Correction or Replacement, and Procedure for Cancellation of Tax Invoice.

The implementation of this e-invoice is a form of service improvement from the Directorate General of Taxes to the public so that they are more tax compliant. This is because the invoice innovation is intended to provide convenience, comfort, and security in carrying out tax obligations. In addition, the existence of this electronic tax invoice also serves to minimize cases of using fictitious tax invoices and duplication of tax invoices.

Since 2014, the government has been promoting the existence of this electronic tax invoice and all people are required to make an e-invoice.

There are many benefits derived from the existence of this e-invoice, especially in terms of paying taxes. These benefits are felt by the PKP (Taxable Entrepreneurs) and the government. For PKP, one of the advantages of using this e-invoice is that they will be protected from attempts to misuse the illegal tax invoice because this e-invoice has been protected by a QR Code. The QR Code contained in the e-invoice will display information about transactions up to the submission of the DPP (Tax Imposition Basis) value.

Meanwhile, the benefits of the existence of e-invoicing that can be felt by the government are the convenience in supervising tax validation, both output tax and input tax; and make service easier because the process is fast by providing a Tax Invoice Serial Number.

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