Among the everyday business transactions, the two most essential invoices that every business has to deal with, regularly, include the purchase invoice and the sales invoice. A sales invoice is given by a seller to its customers when the business makes a sale, and it is the proof of the amount due to the company by the customers. On the other hand, the purchase invoice is its complete opposite.
Let’s understand it in detail.
What is a Purchase invoice?
A purchase invoice is an invoice issued by the buyer of goods. It is a financial document that indicates the details of a purchase that has been made, including the items, amount, date of payment, etc. While its contents are similar to that of a sales invoice, it indicates that a purchase has been made for a particular amount.
A purchase invoice is usually issued after the purchase order. This means that you can generate a purchase invoice for the purchases you make from your supplier once the transaction is complete.
Components of a purchase invoice
Invoice number: Much like the sales invoice, a purchase invoice also has a unique number to identify and relate it to a purchase order.
Purchase order number: Every purchase invoice is generated as a fulfilment of a purchase order and has the associated Purchase Order number. Through the invoice, the transaction details can be traced back to the order to make sure that the transaction is completed correctly.
Date of issue: The date on which the purchase order was fulfilled, and the invoice was generated is present on the purchase invoice.
Vendor/Supplier details: The invoice also includes the details of the seller or the party that the goods are being purchased from, including their name, address, contact details and unique identification or GST number if available.
Items description: The quantity, unit price, and the product code of the items purchased are the vital components of the purchase invoice.
Total and tax: The total amount due by the buyer to the seller, including the taxes as applicable (GST), is also included in the issuance of a purchase invoice.
What is a purchase order?
A purchase order is a document used by the buyer to place an order with the suppliers as per his/her inventory requirements. A purchase order usually initiates a transaction. In some cases, when a business has regular customers, the buyer can issue a Standing Purchase Order (SPO) to ensure regular orders replenish inventory at regular intervals.
Purchase Invoice (PI) vs Purchase Order (PO)
Here are some of the major differences between a PI and a PO:
- A PO is issued first in the chronological order of the documents. It is only once the order is placed, fulfilled, and payment settled (paid or settled to be paid in future), that the buyer issues a PI.
- A PO indicates the beginning of a business transaction. A PI indicates the end of the transaction.
- A PO may not have the price of the products or items involved in the transaction. On the other hand, a PI always contains the cost of the items and the total amount due by the buyer to the seller.
How to generate a purchase invoice using myBillBook?
Every business places many orders for restocking its inventory regularly. For every purchase order that gets fulfilled for your business, a purchase invoice needs to be issued. This can be a time-consuming process. With myBillBook accounting software, you can make this process highly efficient and easy for yourself.
You can generate a purchase invoice by following the steps as explained:
Choose a format: myBillBook software has a variety of formats to choose from. Select a format for issuing a purchase invoice as per your business requirements. You can also customise the format by editing the details required for generating a purchase invoice.
Enter the relevant details: Once you have selected a format template for your purchase invoice, enter the details, including the seller details, items purchased, amount due, taxes, etc. You can also save the seller details and items ordered to create a future purchase invoice faster for recurring orders.
Calculate taxes: Once you have entered the details and taxes applicable, the software will calculate the amount of tax and generate the purchase invoice for you.
Personalise your invoice: You can also select from various themes and colours available on the myBillBook accounting software to give your purchase invoice a personal touch.
Why should you use myBillBook to generate purchase invoices for your business?
Here’s why you should consider using myBillBook for your invoicing needs:
Data backup: myBillBook saves all your data at regular intervals. You do not have to worry about losing any critical information that you have saved on the software. The automatic data backup feature allows you to refer to purchase invoices while filing taxes.
Complete safety: In addition to an automatic data backup, you can also be 100% sure of your data is safe and not misused in any manner. All your data is encrypted, which means it is coded in a manner that only you can access sensitive information about your business.
Options to choose from: The themes, format templates and colour options that are available on myBillBook software allow you to customise your purchase invoice completely. This way, you can create a professional, tax-compliant invoice, which is also suited to the unique needs of your business.
Wide list of items: myBillBook has a digital inventory of products you can choose from while creating your purchase invoice. You can choose from a list of over 1 lakh items, including FMCG, pharma and mobile phone shops. You can also customise your invoice for your industry and type of business (Wholesaler, retailer, reseller, distributor, etc.).
Data transfer: myBillBook allows you to link all your accounting apps to the software to make accounting the easiest and fastest business function for you. You can transfer relevant data from other software like Vyapar, Tally, Busy, Marg and Miracle etc.
Data sync: Your data in a PC and mobile app is synced while using myBillBook and can be easily accessed from anywhere. This means that you can simultaneously access all important documents on your business PC as well as your mobile phone app on the go.
Inventory management: In addition to taking care of all your invoicing needs, myBillBook also helps you manage all your inventory in one place and set reminders to reissue purchase orders when the inventory is low.
Payment reminders: With myBillBook, you can manage all your account receivables and payables in one place and also set reminders to make sure you never lose track of payments.
Read more articles related to this
Difference Between Inventory And Stock