Who Sends the Invoice? The Sender Explained

An invoice is a formal request for payment issued by one party to another after goods or services have been provided. Its purpose is to document a financial transaction, serving as a record for both the sender and recipient. Understanding who sends an invoice clarifies the flow of funds and obligations within a business arrangement.

The Primary Sender: Goods and Services Providers

The individual or entity that has provided goods or services is typically the party responsible for sending the invoice. This occurs because they are formally requesting payment for items delivered or work completed. The invoice serves as an official record of the transaction, detailing what was provided and the amount owed.

For instance, a freelance graphic designer sends an invoice to a client after completing a project, detailing the design work performed and the agreed-upon fee. Similarly, a plumbing business invoices a homeowner for repair services and parts used, itemizing each charge. This applies to both business-to-business (B2B) transactions, such as a software vendor invoicing a corporate client, and business-to-consumer (B2C) transactions, although formal invoices are more common in B2B settings. Businesses generally maintain accurate records of income and expenses for tax reporting, making invoices a significant component of their financial documentation.

Specific Scenarios for Invoice Senders

While the primary provider typically sends the invoice, certain scenarios involve different invoicing arrangements. One such instance is “self-billing,” where the buyer of goods or services creates the invoice and sends it to the seller for payment. This method is often used in large-volume transactions or specific industries where the buyer precisely calculates the amount due, such as in certain automotive supply chains or large retail operations. Contractual agreements often outline the terms for self-billing, ensuring both parties acknowledge this reversal of the standard invoicing process.

Another scenario involves third-party billing, where an agent or specialized service sends invoices on behalf of the primary provider. For example, a property management company might invoice tenants for rent and utilities on behalf of a property owner. Similarly, an accounting firm may handle a client’s entire billing process, dispatching invoices and managing collections. These third parties act as intermediaries, streamlining the billing process for the original service provider while ensuring payment requests are professionally issued and tracked.

Essential Information on an Invoice

An invoice commonly contains specific details to ensure clarity and proper record-keeping for both the sender and the recipient. Each invoice typically includes a unique invoice number and the date it was issued, which helps in tracking payments and managing accounts receivable and payable. The contact information for both the party sending the invoice and the party receiving it is also prominently displayed. This includes names, addresses, and sometimes tax identification numbers, such as an Employer Identification Number (EIN) for businesses.

The document will clearly describe the goods or services provided, often including quantities and unit prices if applicable, leading to a subtotal. Any applicable sales tax or other charges are then added, culminating in the total amount due. Finally, payment terms are specified, detailing how payment should be made and the due date, such as “Net 30” indicating payment is expected within 30 days.