Understanding Invoices: Functions, Components, Types, and E-Faktur

Understanding Invoices – In the transaction process, especially in buying and selling valuables, of course there will be important documents that serve as proof of the existence of these transactions. Keep in mind again that the existence of this invoice is only for buying and selling transactions of valuables, so if you buy and sell vegetables at the market, you will not get an invoice as proof.

Invoices are almost the same as receipts, the difference is that invoices are proof of transactions while receipts are proof of receipt of money from the buyer to the seller.

The use of invoices ( invoices ) is usually found in trading companies that have a sales system on credit. In this case, the invoice can function as a document proving debt or a credit sales transaction between the buyer and the seller.

Then actually, what is the invoice? What are the types of invoices in this trading world? Let’s look at the following review so that Readers understands it!

Definition of Invoice

According to KBBI (Big Indonesian Dictionary), an invoice is a list of consignments accompanied by a description of the name, amount and price to be paid . Meanwhile, according to Mulyadi, these invoices are business documents used in business transactions, and can affect the efficiency and effectiveness of transaction activities .

In fact, an invoice is the same as an invoice, it’s just that “invoice” sounds foreign.

Furthermore, according to Sugeng Hariyanto, an invoice or invoice is a note that describes what items will be sent to the buyer along with the price. 

So, based on these definitions, it can be concluded that an invoice is an important written document that contains buying and selling transactions in the business world . Usually, this invoice is made in triplicate. The first copy is the archive of the company that has the sales system, the second copy is for the buyer, while the third copy can be used as a financial file.

Invoice Functions In The Business World

Previously, it was written that invoices are important documents related to buying and selling transactions, especially those using the credit system. Therefore, invoices certainly have many functions, especially in the business world.

  • As legal evidence when you want to add transactions to the financial books
  • Become evidence of a valid referral source if the related goods or services will be resold to other parties
  • As a valid report for goods receipt and tax invoice
  • As a guardian of legal certainty, especially for sellers and buyers
  • As a storage container for financial records or sales. This is because the invoice has complete information about the buyer and the goods purchased
  • As analytical material to see consumer buying patterns, so that it can be used as a promotional reference in the future

Invoice Function For Companies

The existence of invoices is actually an important document that cannot be omitted by the company, because it can be evidence that the sale and purchase transaction has been carried out before. So, here is the invoicing function for the company.

  • As information regarding the amount of payment bills that must be made by the buyer
  • As information on goods or services provided to the buyer
  • As a basis for reference, if there is an error in the selling transaction, especially in calculating the total invoice

Invoice or Invoice Basic Components

An invoice is an important document that can be used as proof of a transaction, and therefore there must be several special components so that it can be considered a valid document. The following are the basic components that must be included in an invoice or invoice.

1. Written as “INVOICE”

As with other important documents, at the top there must be clear identification of the document. Therefore, the words “INVOICE” or “INVOICE” must be written on the top and front so that readers can understand that the document is an invoice.

2. Invoice Number

The existence of this invoice number is actually almost the same as other important documents. In invoices, this invoice number is a code number that is unique and not used haphazardly, because it can be used as a reference, both internal and external to the company concerned.

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3. Seller Information

Previously it was written that an invoice is an important document containing a sale and purchase transaction using a credit system, so clear and detailed seller information is required. This is to minimize any confusion regarding invoices and when confirming with the buyer it will be easy.

4. Invoice Date

The date stated on the invoice shows the time when the sale and purchase transaction occurred and was officially recorded. Not only that, the date of this invoice also plays an important role in determining the payment due date.

Usually, the buyer will be given a deadline from the time he first received the invoice until he has to pay off the invoice.

5. Payment Terms

Not only the nominal amount of payment contained in an invoice, but also the terms of payment. Even if there is a discount or discount, it will also be included in this invoice. Including the down payment that may have been paid up to the amount of the fine (if the bill is late paid).

6. Product Details

It should be remembered again that an invoice is an important document that contains buying and selling transactions using a credit system, therefore this invoice can also be used as a billing tool.

Therefore, the invoice must contain clear product details, be it the price of the product per unit, the number of products purchased, handling fees, shipping costs, and the tax costs of the product.

Invoice Types

There are several types of invoice or invoice documents. Generally, all of these types are often used by entrepreneurs and business people (both class and middle class) for their buying and selling transactions. Following are the types of invoices:

Based on the Display Form

1. Invoice or Ordinary Invoice

This type of invoice is the most common debt collection document. It is usually used in simple product buying and selling transactions. Therefore, the interface looks simple, sometimes it only contains the product name and selling price.

2. Invoice or Proforma Invoice

This type of invoice or invoice is usually also called a temporary invoice. This is because the proforma invoice document will be provided when product supply is still incomplete.

Therefore, later this invoice will be given to the buyer in stages, or as temporary evidence to show that the product has been shipped.

3. Invoice or Consular Invoice

This type of invoice or invoice is the most exclusive, because it will also include proof of high-end buying and selling transactions, namely between countries. Transactions that most often use this type of invoice are export and import transactions, because they are buying and selling transactions between countries which of course cannot be arbitrary.

Even in the invoice document or consular invoice there must be written approval from the trade attache of the country (embassy) doing the transaction.

Based on the Parties Concerned

1. Sales Invoice

Sales invoice is proof of invoice issued by the seller (usually the entrepreneur) to the buyer (consumer) for the purchase transaction of a number of products (both goods or services). Usually, this type of invoice will be given after the product has been received by the consumer.

This sales invoice or sales invoice will contain detailed information regarding the type of product (goods or services) purchased, the amount of the purchase, the discount obtained by the consumer (if any), and the nominal price to be paid.

Therefore, the existence of this sales invoice can be a form of agreement in the process of buying and selling transactions, including the time lag given by the seller since the fulfillment of the product order until the time of payment.

Then, is this sales invoice very important, especially in the business world? Of course yes, here are some important functions of the existence of sales invoices.

  • As legal evidence of tax reporting
  • As billing information that must be completed by the buyer
  • As a basis for filing a complaint by the buyer
  • As written evidence regarding the quantity and price of products that have been purchased
  • As a reference document, especially when the product will be resold to other parties
  • As a tool to track products that have been sold along with the time and amount of the transaction amount

2. Purchase Invoice (Purchase Invoice)

If there is a sales invoice, then it must also be a purchase invoice because in a transaction there must be two parties, namely the seller and the buyer. As a buyer or consumer, you will not issue a purchase invoice, because this has been taken care of by the producer or seller.

Purchase invoice is an invoice document that will later be received by the consumer or buyer, originating from the producer or seller. Simply put, this purchase invoice is proof that you have purchased a product from the seller.

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Please note, that Purchase Invoice and Purchase Order are different 

In a purchase order, it is a document sent by the buyer to the seller, when they want to order an item or service produced by the seller. In this purchase order document , there will be details of the order, date of delivery, to the price of the goods or services.

If a flow is made, the buyer will create a Purchase Order (PO) and send it to the seller. After that, the seller will confirm the existence of the Purchase Order (PO) and immediately prepare a product order based on the Purchase Order (PO) document.

As with sales invoices, this type of invoice also has many functions, especially for the consumer, namely:

  • As written evidence that the product (goods or service) has been purchased and is in accordance with the order
  • As valid proof if the product will be resold to other parties
  • As billing information as well as the payment term that must be paid by the buyer
  • As evidence of a complaint if there is a product that is not in accordance with the Purchase Order

Know What is an Electronic Invoice ( E-Invoice )

In today’s sophisticated era, of course invoices can be in electronic form. Similar to the National Identity Card (KTP), which has changed its form to become an e-KTP, invoices have also become electronic invoices or e-Invoices.

This electronic invoice has the same function as an invoice in the form of a physical document, the difference is only in the form.

Electronic invoices can be defined as means of transferring electronically, with information in the form of billing and payment information between business partners. This e-invoice system usually also has a digital signature to increase the validation of the existence of the electronic invoice.

Looking at the era that is completely digital, even money which is actually a means of exchange is also in digital form, so this e-invoice is also equipped with a QR Code. QR Code ( Quick Response Code ) is a two-dimensional symbol that can only be interpreted by a scanner.

Example of Using an Electronic Invoice (E-Invoice)

Please note that the invoice is not only used in buying and selling products, but also in paying taxes. Currently, tax invoices in electronic form have been developed and are widely used by the public in paying their taxes to the Directorate General of Taxes.

The beginning of the emergence of electronic tax invoices was because in 2008-2013, there were approximately 100 cases of fraudulent tax invoices. From this case, of course, the state lost around IDR 1.5 trillion. On this basis, the government then issued an innovation, namely the e-faktur application.

Interestingly, there are two reasons behind the Directorate General of Taxation as the tax administration agency to determine that this e-tax invoice should become part of the VAT administration system in Indonesia. The background is the abuse of PKP authority and tax invoices; and the administrative burden of tax invoices that continues to increase.

Even though this is a new breakthrough in terms of invoices, this e-tax invoice is also regulated by a legal basis, you know… One of them is the Regulation of the Director General of Taxes Number 17/PJ/2014 concerning Form, Size, Procedure for Filling in Information, Notification Procedures in the Context of Making, Procedures for Correction or Replacement, and Procedures for Cancellation of Tax Invoices.

The implementation of this e-faktur is a form of improving services from the Directorate General of Taxes to the public so that they are more tax compliant. This is because in this invoice innovation is intended to provide convenience, comfort, and security in carrying out tax obligations. In addition, the existence of electronic tax invoices also serves to minimize cases of the use of fictitious tax invoices and duplication of tax invoices.

Since 2014, the government has been promoting electronic tax invoices and all people are required to make e-invoices.

There are many benefits derived from the existence of this e-invoice, especially in terms of paying taxes. These benefits are felt by the PKP (Taxable Entrepreneurs) and the government. For PKP, one of the advantages of using this e-invoice is that they will be protected from efforts to misuse unauthorized tax invoices because this e-invoice has been protected by a QR Code. In the QR Code contained in the e-faktur, it will display information about the transaction up to the delivery of the DPP (Tax Imposition Basis) value.

Meanwhile, the benefits of the existence of e-faktur that can be felt by the government are the convenience in supervising tax validation, both output tax and input tax; and makes service easier because the process is fast with the issuance of a Tax Invoice Serial Number.