{"id":269707,"date":"2024-07-08T15:48:18","date_gmt":"2024-07-08T03:48:18","guid":{"rendered":"https:\/\/www.reckon.com\/nz\/?p=269707"},"modified":"2025-01-30T17:54:38","modified_gmt":"2025-01-30T05:54:38","slug":"what-is-an-invoice","status":"publish","type":"sbh","link":"https:\/\/www.reckon.com\/nz\/small-business-resources\/invoicing\/what-is-an-invoice\/","title":{"rendered":"What is an invoice?"},"content":{"rendered":"

[et_pb_section fb_built=”1″ custom_padding_last_edited=”on|phone” _builder_version=”4.23″ custom_padding_tablet=”” custom_padding_phone=”0px||||false|false” global_colors_info=”{}”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.23″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_padding=”||0px||false|false” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f4f4f4″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” pac_dcm_carousel_specific_module_num=”0″ border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” locked=”off” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” pac_dcm_carousel_specific_module_num=”0″ global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Copy paste body text here” _builder_version=”4.27.4″ header_2_font_size=”32px” hover_enabled=”0″ header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” locked=”off” global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n

When you enter business ownership, there\u2019s a lot of assumed knowledge that might need explaining. One of the first steps is learning what is an invoice and how <\/span>invoicing software<\/span><\/a> can help you.\u00a0<\/span><\/p>\n

To remove the hassle of creating your own invoice, we\u2019ve also provided a <\/span>free downloadable invoice template<\/span><\/a> and the bottom of this article.<\/span><\/p>\n

What is an invoice?<\/b><\/h2>\n

An invoice is an official document that represents an agreement of sale between a buyer and a seller.\u00a0<\/span><\/p>\n

An invoice is based on credit and represents a debt that is payable by the buyer and owed to the seller.\u00a0<\/span><\/p>\n

An invoice document will include all relevant specifics of; the agreement, payment amount, the products and services being sold, business details, and terms and conditions.<\/span><\/p>\n

Invoice vs. receipt<\/b><\/h3>\n

Some people get confused between these two documents. A receipt is a document which provides proof of purchase, whereas an invoice represents a \u2018bill\u2019 that\u2019s due and still requires payment.<\/span><\/p>\n

What is an invoice reference number?<\/b><\/h2>\n

An invoice reference number (or invoice number) is a unique numerical identifier that\u2019s issued by the seller and included on their invoices.\u00a0<\/span><\/p>\n

The reference number is used to track the payment of a particular invoice and will be referenced by the debtor (buyer) when they make a payment.\u00a0<\/span><\/p>\n

By including an invoice reference number, the seller knows that when funds appear in their bank account, they\u2019re related to a specific invoice and can confirm and report on the payment.<\/span><\/p>\n

Purpose of a tax invoice<\/b><\/h2>\n

A tax invoice is a type of invoice that\u2019s issued when GST is involved in the sale. This is sometimes referred to as a GST invoice.<\/span><\/p>\n

All tax invoices should explicitly state \u2018tax invoice\u2019 as a header and must show the GST applicable and how this was applied to the base price of goods sold.<\/span><\/p>\n

In New Zealand, the GST rate is 15%.\u00a0<\/span><\/p>\n

If you\u2019re turning over more than the GST threshold of $60,000 NZD, you must first register for GST and then apply GST to the prices of applicable goods and services.<\/span><\/p>\n

For example, if you list a sale item with a base price of $100 on your invoice, you then need to add a column for 15% GST, which equals $15.\u00a0<\/span><\/p>\n

You then add them together to display the total cost of the item in the next line, which would be $115.<\/span><\/p>\n

Other than this key difference, a tax invoice operates in the same way as a regular invoice.<\/span><\/p>\n

What information goes on an invoice<\/b><\/h2>\n

What should you be including on your own invoices and what should you be looking for when your business receives one? The information that should be included is as follows:<\/span><\/p>\n