What is Invoice?

An invoice is a commercial document issued by a seller to a buyer, itemizing a transaction and requesting payment. It indicates the products or services provided, quantities, and agreed-upon prices. An invoice is a legal document that forms the basis of a sale.

For Startups: Proper invoicing is a fundamental business process. For a B2B startup, the invoice creates an Accounts Receivable, initiating the payment collection process. For tax purposes (like GST), a compliant tax invoice with all mandatory details (like GSTIN, HSN code, etc.) is required. Using accounting software to generate and track invoices is essential for maintaining accurate financial records.

Example: A design agency completes a project and sends its client an invoice for ₹1,00,000 plus 18% GST, with a 15-day payment term. This document formally requests payment for the services rendered.