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What is an Invoice? 

In simple terms, an invoice is a bill. It is a commercial document that records the transaction between a seller and a customer, showing its detailed breakdown. It bears a timestamp, shipping and handling terms, unit costs, and payment terms.

Significance of Invoice in E-commerce 

Invoices are important documents that keep records of purchases. An invoice is also a legally binding document that proves the agreement between the seller and buyer.

  • Invoices help account for internal controls and also help during audits. 
  • It carries all the essential details, such as the time stamp and the transaction amount, that help maintain official records. 
  • An invoice states the timestamp of purchase and the return period, ensuring hassle-free returns. Therefore, a customer can return a product if the request has been made within the specified period.

Prerequisites for Invoices

  •  An invoice should have an invoice number for internal and external usage.
  • Details like the date, products, and transaction amount must be mentioned.
  • Discounts and finance charges should be mentioned in the invoices. 
  • If a business offers credit-based purchases, then the due date of the payment is also specified in the invoice.

Use Cases with an Invoice 

For example, company X delivers products to a customer but expects to receive payment later. The company will attach an invoice carrying all the necessary information about the due amount and date. The customer has to make the payment on time due to the legalities associated with it, so the company will not incur losses.

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