Online invoicing: everything you need to know in 2021 (2023)

FAQs

What is the rule for e-invoicing? ›

Electronic invoicing system was introduced for taxpayers with Aggregate Annual Turnover of more than ` 500 Cr from 01st October, 2022 for B2B transactions and for export invoices vide Notification No. 13/2020-Central Tax dated 21.03. 2020.

The invoice must describe each product or type of service rendered. The cost of each individual item or service must be included. The taxable amount for the products or services must be included. The total amount due for payment must be clearly included in the invoice.

Taxpayers Exempted From EInvoicing

Insurance Company. Banking Company or a Financial Institution, including a Non-Banking Financial Company (NBFC) Goods Transport Agency (GTA) transporting goods by road in a goods carriage. Transport service provider, providing passenger transportation service.

The government had plans to make e invoicing mandatory for businesses with a cumulative yearly turnover of over Rs. 5 crore in any previous financial year from 2017-18 to 2021-22 from 1st January 2023.

Generally, in terms of the content in an invoice, you're going to have two main sections. The first, with the contact information of the parties and the payment details. Then a second, with a list of the goods and services. Oftentimes, the contact information will be above, and the details of the items below.

Procure-to-pay is the process of integrating purchasing and accounts payable systems to create greater efficiencies. It exists within the larger procurement management process and involves four key stages: selecting goods and services; enforcing compliance and order; receiving and reconciliation; invoicing and payment.

When you send an invoice to a customer, you enter it as a journal entry to the accounting journal. For the journal entry, you can document the total amount due from the invoice as a debit in the accounts receivable account. You also list the total amount due from the invoice as a credit in the sales account.

What are the three types of invoice? ›

Businesses need to create invoices to ensure they get paid by their clients. Invoices serve as legally enforceable agreements between a business and its clients, as they provide documentation of services rendered and payment owed. Invoices also help businesses track their sales and manage their finances.

Invoice Clerk skills and qualifications

Excellent written and verbal communication skills. Understanding of basic accounting math. Strong attention to detail to keep accurate accounting entries. Familiar with accounting software, such as FreshBooks. Solid organizational skills to keep track of invoices.

Penalty for non-issuance of e-Invoice- 100% of the tax due or Rs. 10,000 whichever is higher.

Invoice clerks, also known as billing clerks, send invoices to clients, issue account statements, and generate credit memos.

The penalty for non generation of e invoice applicable here are: Penalty for non-issuance of invoice: 100% of the tax due or INR 10,000 (whichever is higher) will be imposed for each instance of non-compliance.

Therefore, CBIC has clarified that presently, e-invoicing has been made mandatory for registered persons having aggregate turnover more than Rs. 10 crore in any preceding financial year from 2017-18 onwards as per Central Tax Notification 17/2022 dated 01/08/2022.

27th December 2022

The GST Council recommended a reduction of the e-invoice threshold to Rs.5 crore starting on 01st January 2023, but the Govt has not issued a notice about this creating uncertainty among taxpayers, the CBIC department has tweeted.

Currently, businesses with a turnover of Rs 10 crore and above are required to generate an electronic invoice for all B2B transactions. "There is no proposal before the Government, at present, to reduce this threshold limit to Rs 5 crore with effect from 01.01.

A proforma invoice is a preliminary invoice that is sent to a buyer before a sale is confirmed. This invoice highlights the deliverables from the seller's end such as the goods or services to be delivered, their prices, shipping information, and delivery date.

What is the difference between an invoice and a bill? ›

A company may send you an invoice for services performed but upon receipt you see it as a bill. Using the word invoice can imply that payment terms, such as NET-30 days, have been established — whereas a bill is a simple statement of what is due now.

Getting information wrong or sending the invoice to the wrong person. Misspelling a company name or addressing an invoice incorrectly happens all too often, causing delays while the mistake is discovered, a new invoice requested, and the amended document re-issued.

EINs are sometimes referred to as federal tax identification numbers and can be obtained by sole proprietorships, LLCs, partnerships and corporations. Since the EIN identifies a business, it may be included on invoices, but its inclusion is not mandatory.

Don't Include Your Routing and Account Numbers On Invoices–Here's Why! It may be a simple way of passing info but in the age of internet fraudsters and hackers, we beg of you, don't do it.

Invoices before and after payment.

If the client hasn't yet paid, your invoice should include your signature and a space for their signature. Once the client signs the invoice, they've legally agreed to pay the amount owed.

The concept of the Zero charge invoice is to capture the monetary value of any work you provide, that you choose to give to the client at zero charge. From telephone support, audits, extra staff training and even deliveries; anything that you could charge for and don't – capture here.

The supplier should make three copies of the tax invoice for a supply of goods: The original invoice is issued to the recipient. A duplicate copy is issued to the transporter of the goods. The transporter should keep the invoice reference handy, in case they are asked for evidence.

Meaning of FOB

FOB is free on board, also known as freight on board. It is a term commonly used for international shipping. It signifies a transportation term used to indicate that the selling price of the goods includes delivery at the seller's expense only up to a specified point.

Three-way matching is an accounts payable process that checks that the details on a purchase order, the supplier's invoice and the delivery receipt match before an invoice is paid.

What is 2 way matching in accounts payable? ›

In the 2 way matching process quantity and amount on the invoice are matched to the quantity and amount on the corresponding purchase order.

The quickest and easiest way to send your invoices is by email.

The payment due date. A unique invoice number. A description of the products or services sold.

Master Invoicing allows special invoicing functions to be performed applicable to Customers with multiple premises or accounts. Customers can request to create one invoice for each of their premises or accounts. Also, a Customer may want to have one master invoice with the summary of all sub invoices.

The due date should absolutely appear on the invoice and might be the most important item on this list (along with the product description and total amount). The due date will help keep the process and invoice history organized.

Can an invoice be used as a receipt? Since an invoice is a request for payment, not proof of payment, you shouldn't use an invoice in place of a receipt. Once a customer or client pays your invoice, make sure to provide a separate receipt.

Yes, e-invoicing by specifically notified persons is compulsory for the supply of goods or services or both to a registered person.

Who is eligible for E-invoice? ›

The e-Invoice System is for GST registered person for uploading all the B2B invoices to the Invoice Registration Portal (IRP). The IRP generates and returns a unique Invoice Reference Number (IRN), digitally signed e-invoice and QR code to the user.

Seeks to implement e-invoicing for the taxpayers having aggregate turnover exceeding Rs. 20 Cr from 01 st April 2022. Seeks to amend Notification no. 13/2020-Central Tax to exclude government departments and local authorities from the requirement of issuance of e-invoice.

50,000/-. This does not however preclude the consignor/consignee/transporter to generate e-way bills even for individual consignments whose value is less than Rs. 50000/- per consignment.

It is possible to invoice without a company. As a freelancer, influencer, creator, or sole trader, you do not need to start your own company before you can invoice your clients. That is because you are already recognized as a sole proprietor - the most common structure to start a business.

Composition dealer cannot issue a Tax invoice. Composition dealer issue Bill of supply. In case the recipient is unregistered and value of supply is more than Rs.

Revisiting the billing system and processes for e-invoicing implementation. The document data can be that of either today or yesterday. There is a window of 24 hours a day to generate an IRN and IRN cannot be obtained for backdated invoices. Maximum of 1000 line items will be allowed.

B2C invoices are those invoices where the end-user will not be claiming input tax credit (ITC). As of now, B2C invoices are exempt from e-invoicing. However, a taxpayer is required to generate a dynamic QR code for enabling digital payments on all B2C invoices as per Notification No.

Penalty for non-issuance of e-invoice- 100% of the tax due or Rs. 10,000 whichever is higher. Penalty for incorrect or erroneous e-invoice is Rs. 25,000.

In case goods are being transported for weighment purpose and the distance is not more than 20 Kms from the place of the business of the consignor to the weighbridge or vice versa, eWay bill generation is not required. However, the movement of goods must be accompanied by a delivery challan.

You may use different dates for the Tax Invoice and the Eway Bill. Even though Tax Invoices can be issued before the start of the movement of goods, e way bills must only be currently dated. But they are not required to be generated at the start of the movement.

What happens if the e way bill expires? ›

What has to be done, if the validity of the e-way bill expires? After the expiry of eway bill, the transporter may extend the validity period after updating the reason for the extension and the details in PART-B of FORM GST EWB-01.