Why Are Invoices Important In A Business?

Posted on August 2, 2019 in Invoice

Author:
Ruby Dutt

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Generating and sending invoices can be a time-consuming procedure. Still, it is not a process that should be skipped or ignored. A flawlessly designed invoice assists a business gets paid and gives legal protection for both parties. If you ever get audited by the Internal Revenue Service, your online invoicing software system can prove your reported income.

Invoice Basics

When a seller wants to get paid for goods or services, he sends an invoice. An invoice is a paper that details the financial elements of a business transaction which includes the name and contact information of the buyer and the seller, details of the services or goods provided, the cost per item and the total amount due.

Getting Paid

Invoices help an organization in getting paid in full and getting paid on time. It can be hard to get paid without a complete invoice. Usually, companies demand receipt of a detailed invoice before giving payments. Payment terms can assists a company collect receivables quickly.

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Forming Legal Rights

Invoices offer proof that goods and services are delivered and form a company’s right to payment. In case, that a customer does not pay, a company can utilize contracts and invoices to legally show to a court of law that it is owed a payment. Moreover, the company can keep copies of invoices and amounts paid to contractors and salesperson to create that it finished its contractual obligation for payment.

Audit Proof

Even if you do everything right, there is always a possibility your business work could be audited by the IRS. During an audit, the IRS likes to ensure that you have flawlessly reported all annual income you received. If you have an organized system of back to back numbered invoices, the IRS has more confidence that you have reported income fully and correctly. If invoices are inconsistent, the burden of proof is on you to show that you are not hiding any income.

For generating the invoices, try inBOLD Solutions’ free invoice generator online at https://www.inboldsolutions.com

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Ruby Dutt

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