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An invoice is a document issued by a seller of goods or a service to the buyer, that list the products or services along with the quantities. An Invoice can also include but is not limited to: an agreed price, payment terms, due date, and invoice date. An invoice from a seller’s view point is called a sales invoice. An invoice from a buyer’s view point is a purchase invoice. Uncertainties of what an invoice is or what options there may be for non-payment of an invoice often lead to questions like the ones answered below by Experts.
All accounting transaction will be posted as a debit and a credit in order for the books to balance. An invoice from a vendor will be posted as a debit to purchases and also posted as a credit to accounts payable. When the reverse happens and you make a sale to a customer you would post as a debit to accounts receivable and post a credit to sales.
It is legal to use date of receipt versus date of invoice when creating payment terms. Billing can be delayed by reasons out of the responsible person’s hands like delay in postal delivery, lost invoice, etc. For invoices that stipulate a time frame for payment or risk penalties, the date of invoice will be used for the calculation.
Case Details: A customer paid for an invoice of merchandise and the check bounced.
You can choose to record the transaction in a couple of different ways. One option would be to record the billing to the customer as a debit to accounts receivable and also a credit to bank charges for the bank fee costs and post the miscellaneous fee as a separate income item to miscellaneous income.
Another option would be to post the billing as a debit to accounts receivables and post a credit to the miscellaneous income. From the two options the second only records two posts to the books whereas option one had three posts. No matter which option is chosen make sure the debit and credit balance in order to maintain balanced books.
Case Details: Total unpaid invoice value is $1,500 due for over 8 months.
A legal option that you have is to file a small claims case in court. There are many aspects that could come into play as to why your customer has not paid the invoice. Whether they lacked the funds, forgot about the invoice, lost the invoice, or many more reasons. If you file a small claims case, the customer will be legally called to order for the debt that is owed. Perhaps even the scare of being sued in court may make the invoice get paid faster. If you win your small claims case and are awarded a judgment then if still no resolution you could put a lien on the customer’s assets.
Gathering the correct kind of information and understanding invoices can help when faced with situations involving invoice questions. Experts can help answer what an invoice is or what options might be available to use against a customer that doesn’t pay their invoice. Get the answers quickly and affordably by asking an Expert.