The Importance of Invoices in an e-commerce store
Hands up who likes paperwork!
Not many people get up in the morning and declare their desire to finalize their client invoices, and for online entrepreneurs, this is definitely not something that should be left for when you have a spare moment.
Luckily for us, e-commerce platforms and plugins have made this laborious task so automated that it is something that is done rather than something we still need to do.
WooCommerce, as one of the leading e-commerce tools, has made great inroads into the e-commerce arena, ensuring that these critical tasks are taken into account when you set up your business. Chalan Pro is just one of the tools designed to legally cover all of your bases and create a seamless flow from ordering to delivery.
What makes an invoice so important to a business?
Firstly, this very common accounting document is a legal document. It is a reflection of the transaction between you and the buyer of your product or service.
If the buyer wants to claim some sort of deduction like VAT or tax, they will require an invoice from you in order to do so.
As you may be selling into different regions with varying tax laws, it is essential that you include the required minimum information on the invoice.
Here are some pieces of information you need to include on your invoice.
The word Invoice
Making absolutely sure that the document is not misconstrued for anything else and is in fact an official invoice, you should display this prominently at the top of the page.
Prior to an official invoice being supplied, a quote or even a Pro-forma invoice could have been issued. Even though these other documents are an indication of intent, they are not what eventually gets paid against, and cannot be used for deductions or proof of purchase and delivery.
Additional information can also be included alongside the invoice like their delivery note, a debit note or even the courier details.
A unique serial or reference number
As this is an official tax document, a sequential serial number needs to be used to be able to track the transaction. The numbers need to be in order from lowest to highest, and cannot be randomly assigned. It is up to you how you want to create these, as you can use a mix of letters or numbers, change them each billing cycle to reflect the financial year, or even be split by product category.
Whatever one you choose, just ensure it can be consistently rolled out indefinitely.
Registered Business Name
This needs to be the official business name as it is registered as well as include any additional names that you may be trading as. This ensures that there is a clear paper trail for both parties.
As a minimum requirement, your contact details and those of your customer need to be included.
A detailed address is best practice, but as a minimum requirement, a city and country could suffice.
Clients often use contact details when they need to make a query or even repurchase, so it is best to include as much as possible to make their lives as easy as possible to do so. Including contact details, street address details, email addresses and a few telephone numbers is a good start. Listing various departments like accounts for possible queries or sales for additional support is a great idea. If you have multiple branches or dealers, this can also be included for ease of use for the customer.
Taxation numbers and codes
It can become complicated if you are doing business in multiple regions, but it is a legal requirement to include your tax details on the invoice. Company TAT, GST, VAT etc. all should be included. Some companies also include their own and their customer’s registration details on their invoices. Having all of this information in one place is so much better than having to search for it, or worse, have to call up and ask for it.
Your clients details
This should never be blank, as it negates any legality of the document. A well-structured invoice includes as much information from the client as possible. The full name of the business, contact person, tax information, address and contact numbers are a bare minimum.
Detailed product or service descriptions
In order for the invoice to be properly managed as a legal document, a product name and description are required.
This needs to be itemized for a number of reasons, but mainly as proof of purchase in the event of a return or query. Ensure that you have the name, size, type, quantity, unity price, vat amount and finally the total price of every item. Bundling a large order of goods into one line of commentary is not smart business practice and can cause trouble down the line.
Additional cost information
This may include and discounts or coupons offered, as well as any additional costs for the client. Clear and concise descriptors ensure that there are no misunderstandings at a later date. Additional costs can include delivery charges, returns charges, shipping and customs charges and even any outstanding payments due from them.
Payment details and terms of payment
Many companies negotiate payment terms with their customers, but eCommerce stores are mainly on a cash upfront basis. This protects the seller from non-payers. Having your payment and banking details large and clear on your invoice as well as clear payment terms will negate any options of late payments and legally protect you if they don’t pay. By having very clear guidelines, the customer cannot dispute payment terms down the line.
T’s and C’s apply
If you need to stipulate additional terms and conditions relating to the sale, you can also include them here.
The benefits of eCommerce invoices are they are digital, so you can hyperlink your t’s and c’s to a website for more details on warranty’s, refund and return policies, and service agreements.
Making reference to them on the invoice is beneficial for both the client and your business, in the event of any disputes down the line.
Make your invoicing process work for you
Populating your invoice information at the beginning of the process may take some time, but you only need to do it once, so make it count. The more accurate and detailed your information, the fewer business interruptions you will have later on.
When it comes to e-commerce, your customer enters the majority of their own information, so when setting up the parameters, have some essential information that is mandatory but not obstructive to the purchase process.
Just cover all of your bases so that everything is clear and to the point.
If you have not yet had a look at the WooCommerce PDF Invoices and Packing Slips Pro (Chalan Pro), it not only sends the basic invoice, it is fully customizable to suit your business. Check it out here: Chalan Pro