What Information Is Required on an Invoice?

An invoice serves as a formal commercial document issued by a seller to a buyer, representing a request for payment for goods or services provided. It functions as a clear record of the sale for the seller and a record of purchase for the buyer. Invoices are also important for accurate financial accounting, tax reporting, and managing cash flow for businesses.

Essential Invoice Components

A professional invoice begins with clear identification of both parties involved in the transaction. It must include the seller’s legal business name, physical address, and contact information such as a phone number or email address. Similarly, the invoice needs to specify the buyer’s legal name, whether an individual or a business entity, along with their address and relevant contact details.

Each invoice requires a unique invoice number for tracking. These numbers should be sequential, though there are no strict federal rules on their format in the United States, allowing for systems that might incorporate dates or customer codes. The issue date is also necessary as it establishes the starting point for payment terms and deadlines. A detailed description of the goods sold or services rendered is also fundamental, providing an itemized list.

Financial Details

Beyond identifying the transaction, an invoice presents a comprehensive monetary breakdown. For each item or service listed, it should clearly state the quantity provided and its corresponding unit price. This enables the calculation of a line item total for every individual good or service by multiplying the quantity by its unit price.

The subtotal represents the sum of all these line item totals before any additional charges or reductions are applied. Applicable taxes, such as sales tax, must be clearly stated, including the tax rate and the precise calculated tax amount. The final, grand total amount that the buyer is required to pay is prominently displayed.

Payment Terms and Instructions

The invoice must clearly communicate the payment due date, which can be a specific calendar date or a standard term such as “Net 30,” indicating payment is due within 30 days of the invoice date. Businesses should also outline the accepted payment methods available to the buyer, which may include bank transfers, credit card options, or checks.

Specific payment instructions are important to ensure the transaction is processed correctly. For bank transfers, this means providing bank name, account numbers, and routing details. For payments by check, the invoice should specify to whom the check should be made payable and the mailing address. Online payment methods might involve a direct link to a secure payment portal. Finally, the currency in which the invoice is issued and payment is expected must be explicitly stated.