Chapter 11

How to Read an Invoice? Things You Must Check

Author: Riddhi Patel

Jun 26, 2020

Top 5 Essential Things to Check in an Invoice

Every invoice has templates that divide one section from another. To pay your invoice, the responsible department for payment will have to look at the right things, such as what is on an invoice? And how to read an invoice statement before approving and processing your payment. Herein we will be discussing things that you must check while reading an invoice.

  • The supplier’s Contact Information
  • Purchase Order Number
  • Invoice Number
  • Pricing and Description
  • Payment Terms

Top 5 Essential Things to Check in an Invoice


  • The Supplier’s Contact Information

The supplier’s contact information includes the correct supplier’s name, company name, and address, email address, phone number, details of the accounting department. These should have all the details in clear fonts. If any of this information is missing, then you might get a late payment.

  • Purchase Order Number

When a customer or a company receives an invoice with a purchase order number, it means the customer or company has already approved the amount they will pay.

When the right department in charge of payment sees the purchase order number, their team detaches the original purchase order and compares the details to ensure it tallies with that on the invoice.

Not all companies use a purchase order number; they only need it when making large and expensive orders. A company may set a rule that all orders above $5,000 will have an approved P.O. number in advance.

  • Invoice Number

Companies use an invoice number for reference purposes, sometimes for pending payment. The supplier is responsible for assigning invoice numbers to the invoice.

An invoice number will assist both the supplier and the customer. Once the customer makes a payment, he can close the purchase order, which means the order is generated and the transaction is done.

When the supplier of goods gets paid for the invoices, he can reference the invoice number to keep a record of the invoices that have been paid, after which the transaction becomes closed. A supplier who works for the same customer will need to assign the invoice number to help follow up on paid and unpaid invoices. He also needs to keep all the information along with the usage summary handy.

  • Pricing and Description

This aspect clarifies the customer on the services or products that have been discussed when negotiating the charge summary and agreed price. The information should not be modified from that of the purchase order.

An alteration on the invoice total doesn’t necessarily mean the payment cannot be approved. If customers change their minds halfway in the business, their accounting department will notice the purchase order change. If the difference is not much, the customer has already approved and signed the invoices before sending them to the accountant.

An explanation for every cost you’re requesting in the invoice is also necessary. Assuming a customer wants to know how much he spent on a particular service after a long time. He can trace back the invoice and see how you have explained the cost. You have to detail your invoice to the customer, so he doesn’t encounter much stress finding the invoice.

  • Payment Terms

Payment terms are there for notifying the customer of the time you as the supplier are expecting your payment. Sometimes you find phrases like “net 60 days” or “payable upon receipt.”

Some payment terms can be confusing, especially when the customer has his own payment time, and does not agree with that of the supplier.

For example, Jack is the owner of a landscaping company in Florida. He sends an invoice to a large car dealership being the first of his invoice as the business owner and adds a payment term of “net 30 days” to the invoice. This term might differ from the agreement with the dealer, who regularly pays the invoice every 60 days. Jack is unaware of his customer’s payment terms, and he phones the company after his payment date is due. 

The supplier of services and the customer working for the first time should always reach a payment agreement. If Jack were aware of his car dealership payment terms, he’d have demanded an upfront payment of maybe 35% of the total amount before he starts the job.

In this case, he’ll have to prepare two invoices. One for the initial 35% upfront payment and another after his job, for the 65% he’s yet to receive with appropriate payment methods.

Payment terms also inform the customer of what preferred payment method the supplier of service accepts.

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