Invoice

An invoice is a document used to demand and specify payment for wares and services. Typically, this is preceded a purchase and sales agreement, a consultant agreement or a framework agreement, which establishes the conditions for a trade. Hence, the invoice is the document demanding payment for the trade. You can also choose to create a receipt, which concludes the trade.

What does an invoice contain?

An invoice commonly describes a number of fundamental elements concerning the trade. This concerns the amount and description of the service or article, the price for the service or article including payment terms. These could determine, whether payment is to be made by card or cash, or details on which bank account the amount is to be paid to.

According to the law, there are certain requirements for an invoice. First and foremost, that there has to be a series of consecutive invoice numbers, preventing fraud and missing invoices. If a single invoice is sent, it has to be numbered with a 1. If several invoices are sent to the same vendor, they have to be numbered 2,3,4 and so on - consecutively.

Every invoice has to be dated correctly. Next, information about seller and buyer has to be stated, which includes name, address, business registration number. In other cases the EAN number. This is followed by descriptions of the articles, including kind, quantity and price. Finally, the VAT-amount has to be stated. Furthermore, the invoice has to indicate, whether one is authorized to deduct the VAT, which then has to be declared. This can apply to creative tasks, as with a freelance journalist agreement.

Rules for invoices

It is required by law to store an invoice for five years. This is stated in the Bookkeeping Law and therefore has accounting-related and legislative reasons. This is also called the retention requirement.