An invoice is a formal document used to record a transaction between a seller and a buyer. It is one of the most basic tools in the business world and acts as a bill in which the seller lists the goods or services provided and indicates the amount to be paid by the buyer. The invoice is thus a demand for payment. The invoices that a company sends to its customers are called Customer Invoices and the invoices that a company receives from its suppliers are called Supplier invoices. Companies send their customer invoices in a uniform layout (generated by their business or financial system), whereas a company receives invoices in several different layouts and formats depending on what each supplier sends.
What should an invoice contain?
For an invoice to be valid, it needs to contain certain information, whether it is in paper or electronic form. In Sweden, the content of the invoice is regulated by the VAT Act and the Accounting Act. In Sweden, and within the EU, the following information must be included:
- Name and address of the seller
- Name and address of the buyer
- Date of issue of the invoice
- Unique invoice number
- Seller's VAT registration number
- A description of the goods or services supplied (quantity and nature of the goods or scope and nature of the services).
- Delivery date (if different from the invoice date)
- Amount to be paid, including VAT
- The amount of VAT to be paid.
- The VAT rate applied to each item of goods or services, as well as any price reduction or discount not included in the unit price.
- Payment terms and due dates
- When the buyer issues the invoice on behalf of the seller, the indication "self-billing" must be given
Forms of invoices
Invoices can come in several different forms, but the most common are:
- Paper invoice: Traditionally, invoices have been printed on paper and sent by post. This is still a common practice, especially in smaller businesses or in countries where digitalization is not as widespread.
- Electronic invoice (e-invoice): With increasing digitization, electronic invoices have become more common. An e-invoice is sent and received in a structured electronic format that allows for automatic processing. This is often more efficient and reduces the risk of errors. E-invoices are sent via electronic communication networks, such as Peppol.
- PDF invoice: A middle ground between paper invoices and e-invoices. Here, the invoice is sent as a PDF file via email. Although it is digital, it still requires manual handling, unless you use a service to read out the invoice information, then this type of invoice can also be handled fully automatically.
Format and layout
There are no specific requirements for the layout of the invoice image, but it should be clear and structured to avoid misunderstandings. It is important that all necessary information is easily accessible and that it is easy for the buyer to identify what is being invoiced and the amount to be paid.
For e-invoices, on the other hand, there are agreed formats for the file (almost exclusively in XML format) containing the invoice information. The use of an agreed format, a standard format, is the very essence of an e-invoice.