What is the purpose of an invoice?

Suppliers provide sales invoices to customers after the consumer pays for a received good or service. It is a written or electronic documentation of the merchant’s transaction to the consumer. It is important that companies have evidence of all sales, that they protect themselves and that they keep records.

What is the purpose of an invoice?


The most fundamental purpose of a sales bill is to keep records of the sale. It provides a way to track the date on which a product was sold, how much money was paid and whether there are still debts. The bill is an invaluable tool for accounting. You can also track which employees are making sales and which items they are selling.

Tax purposes
The government does not have a system or template for the type of bill that a business must have. For tax reasons, however, it is essential to record and maintain all sales invoices. The Internal Revenue Service suggests that small business owners keep an up-to-date summary of all business transactions, of which invoices are an integral part. This helps a company to declare taxes, ensure that the right amount is paid, and avoid an audit.


Sales invoices protect small businesses from fraudulent or insignificant civil actions. The invoice shows that at some point in time a certain good or service was provided. An invoice bearing a customer’s signature is particularly valuable because it represents an agreement between a supplier and a customer. Without an invoice, there is no evidence that the sale has taken place, which also leads to price conflicts.


A company that closely monitors all sales invoices can use the information to target its customer base. For example, companies can enter data such as sales dates, products sold, and the amount for which they have sold. Computer programs or marketing companies can gather information to display shopping plans, popular products, and earnings trends. This is helpful in developing business marketing strategies.

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