A vendor invoice is a request for payments. It is an official document prepared by the vendor for the customer which clearly explains the details like invoice status, payment terms, services, sales taxes, late payments and payment methods.
This article will explain in detail the basic invoice terms:
1. Terms of Sales
Terms of sale mean the payment terms on which the vendor and customer have agreed upon. The terms usually include cost, services, delivery method, payment method and the due date.
This is an agreement that is finalized and signed between the vendor and the customer. It clarifies all the ambiguities and disagreements about the payments.
2. Advance Payments
Advance payments are the payments made prior to the work delivery. Business owners require advance payments most often for their services or products.
Mostly 50 percent of the actual amount is charged beforehand to start the work and it is also mentioned in the invoice.
3. Immediate Payments
Immediate payments are also known as “Cash on Delivery (COD)” OE “Payable on Receipt” payments which means that the customer pays for the product when he/she receives it.
If the customer does not pay immediately after receiving the product, then the seller has all rights to repossess the product delivered. Immediate payments often include the delivery charges too.
4. 2/10 Net 30
Net 30 means the 30 days time period for paying to the business owner. A customer has to pay the amount within 30 days of the purchase. Some companies also offer discounts if payment is made within the first week of the due date.
5. Line of Credit Pay
Line of Credit Pay gives leverage to the customer by setting instalments on a monthly or quarterly basis.
A line of credit payment allows a customer to buy a product using a credit card where the customer has to pay a specific amount on a monthly or quarterly basis. The services on credit are also having an interest amount with them.
Estimation refers to a sketch that a company provides to the customer that gives a clear picture to the customer. The estimation is not the final bill given to the customer, but it includes all the essentials like pricing, breakdown of services and delivery services.
An estimate can also be converted into an invoice after the sale is made.
7. Interest Invoice
Interest invoices hugely impact the customers who are habitual of paying late. The interest is calculated on each delay day after the due date It also serves as a reminder to pay the due amount to the customers.
8. Invoice Factoring
Invoice factoring is referred to the type where a vendor is in desperate need of cash but the client has not yet paid the amount. It is also considered an invoicing solution.
In this type, you sell a few or some of your unpaid invoices to the invoice factoring company and they pay you the invoiced amount immediately and then they collect payment from your customers directly. But keep in mind that these companies also charge a certain fee.