What is a Vendor Invoice?

A vendor invoice is a document listing the amounts owed to a supplier by the recipient. When a customer orders goods and services on credit, the supplier prepares an invoice and issues it to the customer. This vendor invoice contains not only a listing of the amounts owed, but also any sales taxes and freight charges, as well as the date by which payment should be made, and where to send payment. Upon receipt, the customer enters the invoice into its accounting software, and schedules it for payment.

No vendor invoice is issued if a customer pays in cash; in this case, a receipt is prepared for the customer, or an invoice that is stamped "paid".

Vendor Invoice Terms

A vendor invoice contains a standard set of terms that set the payment terms with the customer, while also assisting the customer in logging the invoice into its accounting system. Some of the key invoice terms are noted below.

Payment Terms

The payment terms block on the invoice states the number of days that the customer has in which to pay, such as 10 days or 30 days. It may also specify an early payment discount, such as payable in 10 days at a 2% discount, or payable in full in 30 days. Alternatively, this block may state that the amount is payable in full upon the customer’s receipt of the invoice.

Invoice Date

The invoice date is critical, since it sets the start date for the customer’s payment interval. Without an invoice date, the customer would likely use the invoice receipt date, which is usually several days later than the date on which the invoice was created, and so would result in a delayed cash receipt for the vendor.

Payment Options

A well-constructed invoice will include a variety of payment options for the recipient, such as by credit card, or by check to a lockbox. If the invoice is issued electronically, it may include a link to an online payment option. This feature can result in accelerated payments from customers.