What is an Invoice?
An invoice is a commercial document that itemizes a transaction between a buyer and seller. It serves as a formal request for payment and a record of the sale.
Invoice Definition
An invoice is a document sent by a seller to a buyer that lists the products or services provided, their quantities, prices, and the total amount due. It serves as:
- A payment request - Tells the customer how much they owe
- A legal record - Documents the transaction for both parties
- A tax document - Required for VAT claims and SARS compliance
- An accounting record - Tracks income and accounts receivable
What to Include on an Invoice
Types of Invoices
Standard Invoice
The most common type. Issued after goods are delivered or services rendered.
Pro Forma Invoice
A preliminary invoice sent before work begins. Acts as a quote or estimate.
Tax Invoice
Required for VAT-registered businesses. Must include VAT number and breakdown.
Credit Note
Issued to reduce the amount owed, typically for returns or corrections.
Recurring Invoice
Automatically generated at regular intervals for ongoing services.
Final Invoice
Issued at project completion, often following progress invoices.
South African Tax Invoice Requirements
If you're VAT registered in South Africa, your invoices must meet SARS requirements:
- Display "Tax Invoice" prominently
- Include your VAT registration number
- Show VAT amount separately (15%)
- Include customer's name and address
- Use sequential invoice numbers