Buying and selling operations use a sequence of documents, mainly for information, proof, or payment.
- Letter of enquiry: sent by a buyer to a supplier, asking for a catalogue or price list, usually when dealing with the supplier for the first time.
- Price quotation: sent by the seller in response, describing goods, prices, terms of trade, and conditions of delivery. It’s really a promise to supply goods on stated terms. A price list is a bare statement of prices, a catalogue gives fuller, illustrated detail, and price current is a periodically issued list for goods whose price fluctuates.
- Purchase order: sent by the buyer after choosing from catalogues, including the delivery date, reference number, and buyer’s signature — once the seller accepts, they are bound to supply the items.
- Pro-forma invoice: sent by the seller asking the buyer to pay before goods are dispatched, often when the seller doubts the buyer’s creditworthiness or the buyer wants to inspect goods first.
- Advice note: tells the buyer that goods are on their way, so they can check them on arrival.
- Invoice: sent by the seller to claim payment, with details like the parties, description, date, reference number, quantity, unit price, total amount, and terms of trade.
- Delivery note: sent with the goods, listing quantity, type, order number, and vehicle registration; the buyer signs and returns a copy as proof of delivery.
- Credit note: issued by the seller (in red) to correct an invoice in the customer’s favour — e.g. when overcharged, when damaged goods are returned, or when goods invoiced weren’t supplied.
- Debit note: sent when charges on an invoice need to increase, e.g. more goods were supplied than ordered; it can also be sent by a buyer to a seller to correct an undercharge.
- Statement of account: a summary of all transactions between the parties over a period, showing the outstanding balance. Cash payments and credit notes reduce the balance (credit side); credit sales and debit notes increase it (debit side). A bank statement works the same way for a current account — deposits are credit items that increase the balance, while withdrawals and bank charges are debit items that reduce it.
- Receipt: confirms that payment has been made for goods purchased.
Invoice vs Statement of Account
| Invoice | Statement of Account |
|---|---|
| A claim for one single supply of goods | A summary of transactions over a period |
| Carries a single date | Relates to a period of time |
| No information on payments made or received | Contains that information |
| Doesn’t show the outstanding balance | Shows the outstanding balance |
