In any business, transactions between buyers and sellers happen constantly. This process repeats over and over again.
To record these transactions, businesses usually issue a document—such as a receipt or an invoice—that serves as proof of the transaction once both parties agree.
Beyond being physical evidence of a deal, invoices are also important documents that both buyers and business owners can keep for their records.
There are several types of transaction documents, and one of the most common is an invoice. Invoices generally fall into two categories: sales invoices and purchase invoices. But many people still don’t fully understand the difference between the two—or what they actually mean.
What Is a Sales Invoice?
A sales invoice is a formal document issued by the seller to the buyer as proof of the sale of goods or services. Typically, the buyer receives a sales invoice once the ordered product arrives.
In some cases, though, the invoice is sent at the start of the transaction—depending on what both parties agreed upon.
Telling the difference between a sales invoice and a purchase invoice is fairly straightforward: if the goods are purchased on credit, it’s considered a purchase invoice. If the transaction is paid in full at the time of purchase, it’s a sales invoice.
Why Sales Invoices Matter for Your Business
Sales invoices serve a range of functions—not just for bookkeeping but also for tax reporting. Here are six key reasons they matter.
A key document for financial reporting
Sales invoices act as formal records of payment—either in the form of a billing statement or receipt—issued by the seller to the buyer. They’re essential for compiling accurate financial reports.
Useful for tax reporting
Sales invoices can also function as electronic tax invoices (e-invoices). According to Article 19 of PER-03/PJ/2022, these documents are issued by registered taxable businesses (PKP).
Clarifies information about taxable businesses and goods/services
A PKP (taxable entrepreneur) is an individual or company that sells taxable goods or services and is required to charge VAT (Value Added Tax).
Whenever a PKP sells taxable goods or services, they’re legally obligated to issue a tax invoice as proof of VAT collection from the buyer. This means that in addition to the base price, buyers must also pay VAT as outlined in the invoice.
Outlines payment deadlines
Sales invoices clearly state payment due dates, making them a helpful reference for managing cash flow and ensuring timely payments.
Acts as order reference in case of delivery issues
Sales invoices are useful for tracking and verifying the details of a transaction. If something goes wrong with the delivery—like receiving the wrong item—the invoice serves as a reliable point of reference to resolve the issue.
Serves as a resale reference
For buyers, the sales invoice can also serve as an official document if the purchased goods or services are intended for resale.
Sales Invoice vs. Invoice: What’s the Difference?
The term “invoice” is often used interchangeably with “sales invoice,” but there are differences. An invoice is generally a formal bill issued to the buyer to confirm a payment obligation.
It’s typically generated once the goods have been delivered and the delivery note has been signed by the buyer.
Key Components of a Sales Invoice
To create a proper sales invoice, you’ll need to include certain key details. Here’s what you should have:
Business Information
Start with your business identity. Include your name, address, and logo. You can also add your slogan if needed. The business information should be clear and easy to verify.
Customer Name
Always include the buyer’s name and address. These details are essential for both your records and the customer’s, so double-check for accuracy. Misspelling a customer’s name could make your invoice look unprofessional.
Transaction Date
The invoice should clearly show the date the transaction took place. You can also include the exact time if necessary.
Sales Details
Be specific about what’s being sold. Include item codes, names, quantities, units, unit prices, any discounts applied, and the total cost. If there are custom requests from the buyer, those should also be noted.
Total Amount Due
The invoice should clearly show the subtotal (the sum of all items), VAT (if applicable), and the final amount due. This level of detail helps ensure transparency in every transaction.
Automated Sales Invoices with Opaper: No More Hassle!
Creating invoices manually can be time-consuming and complicated. But don’t worry—Opaper is here to simplify the process for you.
If you run a business—especially in F&B—that needs to issue multiple invoices regularly, just use Opaper.
Opaper helps you create sales invoices effortlessly, without having to calculate VAT or other components manually. The app can generate your invoices automatically, tailored to your business needs.