What is an invoice?
An invoice is a receipt that is issued when a seller sells something to another individual or a company. This document states the details of the transaction, including the products, quantities, and prices. In addition, the payment terms are included in the invoice. The invoice can be paid right away or at a later date, depending on these terms. If the invoice is not paid right after the goods have been received, the buyer gets a clear indication on the payment due date. If the invoice was paid before or during the purchase, the sellers mention that in the invoice to avoid any further confusions between both parties.
From the viewpoint of the seller, the invoice is called a sales invoice. If you’re a buyer, then you would be getting a purchase invoice.
How many invoices can be processed?
To answer this article’s question, “How many invoices can one person process?” — it depends on the set of circumstances, but an average employee in an accounting department can process up to 5 invoices per hour, or 42 per day. This amount can go as high as an average of 906 invoices per month. This, however, varies on the complexity of the invoices and the possibility of a human error during the process. In case of a human error, it would take much longer to fix it depending on how quickly the error was spotted.
Fully manual invoice processing may be less effective and can cost the company more in the long run. Depending on the size of the business, that amount can go as far as thousands of dollars per month. However, manual invoicing can be beneficial for small family-run businesses that don’t have a large number of invoices to deal with per day.
How are invoices processed?
Invoices need to be dealt with from the moment they arrive until the payment has been submitted. They may be sent by email or delivered by post, however, regardless of their respective delivery method, they are transferred to the accounts payable department.
Once the invoices arrive in the accounts department, they are usually sorted in different categories to make the whole process easier to go through. There are inward and outward invoices, recurring or automatic, domestic or international, etc. Each invoice has a unique number that must match with the order number.
After this process comes validation of the invoices. The validation involves personal details verification such as the vendor’s name, address, description, account number, sum due, tax, etc. Once everything has been verified, the confirmed information has to be filled into the accounting software system.
Besides the verification of the details, the responsible person needs to check if the goods have arrived and only afterwards sign it off. Generally, companies have set invoice limits and if an invoice exceeds a particular limit, it may require further approval from up in the company’s hierarchy.
After everything has been checked and matched, a voucher is created so that the payment can be issued.
How many types of invoices exist?
There are many types of invoices, and depending on which one is used determines how many can be processed by one person. Most accountants are well-versed in processing most if not all of the invoices listed below.
- Standard invoice. A widely used form of invoicing that can fit most business models due to its flexible and general format.
- Credit memo invoice. Usually issued by a company that needs to provide a refund or a discount due to a previous error.
- Debit memo invoice. Opposite to the credit memo, businesses use this type of invoice when they need to increase the amount the client owes them.
- Mixed invoice. These types of invoices are a combination of credit and debit memos.
- Commercial invoice. These invoices are issued for international customers whose goods need to go through customs and must contain additional information on the packaging.
- Timesheet invoice. Used among businesses or employees who are hired to work on hourly rates.
- Expense report invoice. This type of invoice is used to reimburse expenses incurred during business-related meetings that aren’t covered by any other type of invoices and typically they are paid upfront.
- Pro forma invoice. Used when a business wants to give a rough estimate of the time required to complete the project. This type of invoice may be adjusted after the project is completed.
- Interim invoice. When working on exceptionally large projects, an interim invoice may be used so that the business can raise invoices after a certain part of the project has been completed.
- Final invoice. The final invoice is raised after the project has been completed.
- Past due invoice. This type of invoice is sent to a client if they are late with a payment and are typically sent right after the payment has been missed. They may also include late fee charges.
- Recurring invoice. Used for services that offer the same set of services to their clients repeatedly over larger periods of time.
- E-invoice. All of the above invoices can be sent via email. This has become a standard practice in the business world as the recipient will receive it in no time.