Invoice

An invoice is a time-stamped commercial document listing goods or services provided and the amount the buyer must pay, including payment terms and due date. It is used for bookkeeping, tax reporting, and as evidence of a transaction between a seller and a buyer.

Invoices are essential for businesses of every size — freelancers use them to request timely payment, finance teams rely on them for accounts receivable and tax compliance, and customs authorities require them for cross-border shipments.

What is an invoice?

An invoice is a formal commercial record issued by a seller to a buyer to request payment for goods or services rendered. It itemizes each product or service, the unit price, quantities, applicable taxes (VAT or GST where required), discounts, shipping or handling fees, the total amount due, a unique invoice number, the issue date, and the payment due date.

Invoices are not contracts by themselves, but they often reference contract terms. They serve as the primary document for tracking accounts receivable, forecasting cash flow, and meeting tax reporting obligations. For international transactions, invoices must also include specific trade details such as HS codes, country of origin, Incoterms, and tax identifiers depending on the jurisdiction.

From Deel's perspective, invoices are the operational bridge between work and pay. Deel helps teams collect compliant contractor invoices, automate recurring billing, and pay contractors globally while capturing the fields and documentation needed for local tax and compliance reporting.

What to include in an invoice

• Seller name and contact details: Business name, address, email, and phone number.
• Buyer name and contact details: The client or company being billed.
• Invoice number: A unique identifier for tracking and record-keeping.
• Issue date: The date the invoice is created and sent.
• Payment due date: When payment is expected, based on agreed terms (e.g., Net 30).
• Line-item descriptions: Each product or service with quantity, unit price, and subtotal.
• Tax rates: VAT, GST, sales tax, or other applicable taxes with amounts shown.
• Total amount due: The final amount including all line items, taxes, and any discounts or fees.
• Payment terms and methods: How and when the buyer should pay (bank transfer, credit card, payment platform).
• Tax identifiers (for international invoices): VAT or GST registration numbers where required by local law.

Types of invoices

• Standard invoice: The most common type. Lists goods or services, amounts, and payment terms for a single transaction.
• Pro-forma invoice: A preliminary invoice sent before goods are delivered or services completed. Used as a quote or estimate.
• Commercial invoice: Required for international shipments. Includes customs details such as HS codes, country of origin, and Incoterms.
• Tax invoice: Includes tax registration numbers and tax breakdowns. Required in many countries for VAT or GST reporting.
• Credit note: Issued to correct or cancel a previous invoice — for example, after a return or billing error.
• Recurring invoice: Automatically generated on a set schedule for ongoing services or subscriptions.
• Timesheet-based invoice: Calculated from logged hours and an agreed hourly rate. Common for freelancers and contractors.

How to create an invoice

1. Choose a format. Use invoicing software, a spreadsheet template, or a platform like Deel that generates invoices automatically for contractor payments.
2. Add seller and buyer details. Include full business names, addresses, and contact information for both parties.
3. Assign a unique invoice number. Use sequential numbering (e.g., INV-2026-001) for easy tracking and record-keeping.
4. List line items. Describe each product or service with quantity, unit price, and subtotal.
5. Add taxes and discounts. Apply the correct tax rate for the transaction and note any agreed discounts.
6. Set payment terms. Specify the due date (e.g., Net 30) and accepted payment methods.
7. Review and send. Double-check all details for accuracy, then send the invoice to the buyer via email or your invoicing platform.

Invoice vs receipt

• Invoice: Issued before or at the time of delivery to request payment. It is a bill.
• Receipt: Issued after payment is received to confirm the transaction is complete. It is proof of payment.

An invoice asks for money. A receipt confirms money was received. Both are important for bookkeeping and tax records, but they serve different purposes in the transaction flow.

International invoicing considerations

• VAT and GST: Many countries require tax invoices that include the seller's VAT or GST registration number and a breakdown of tax amounts. Requirements vary by jurisdiction.
• Commercial invoices for customs: Cross-border shipments typically require a commercial invoice with HS codes, country of origin, declared value, and Incoterms.
• E-invoicing mandates: Some countries (including Italy, India, and several Latin American nations) require electronic invoicing through government platforms. Check local requirements before issuing invoices in these markets.
• Currency and language: International invoices may need to show amounts in the local currency or include a translated version depending on the buyer's jurisdiction.

Key facts

• Required fields: Seller and buyer name, invoice number, issue date, description, quantity, unit price, tax rates, total due, and payment terms.
• Typical payment term: Net 30 (30 days) unless otherwise agreed.
• Common types: Standard, pro-forma, commercial, tax invoice, credit note, recurring, and timesheet-based.
• Invoice is not a receipt: An invoice requests payment. A receipt confirms payment received.
• For international trade: Include HS codes, Incoterms, and the seller's VAT or GST ID where required.

How Deel helps with invoices

Deel supports contractor invoicing and payments by allowing contractors to submit invoices directly through the platform. Features include automated recurring invoices, compliant payment processing across jurisdictions, and built-in fields for tax and compliance documentation. Learn more about invoicing on the Deel blog.

Example

A freelance designer delivers a website and emails an invoice listing 40 hours at $75 per hour, a subtotal of $3,000, 10% sales tax of $300, invoice number INV-2026-104, and Net 30 payment terms. The client uses the invoice to process payment and record the expense for accounting and tax filing.

Related terms

• Pro-forma invoice
• Recurring invoice
• International PEO
• Compliance and legal guidance

FAQ

What is an invoice? An invoice is a document a seller issues to request payment for goods or services, listing itemized charges, taxes, invoice number, issue date, and payment terms.

How do you create an invoice? Include seller and buyer details, a unique invoice number, date, line-item descriptions with quantities and unit prices, taxes, total amount, and payment terms. Use a template or invoicing software to automate numbering and recurring billing.

What is the difference between an invoice and a receipt? An invoice requests payment before or at delivery. A receipt is issued after payment to confirm the transaction was completed.

Can I use one invoice for international shipments? For international shipments you may need a commercial invoice with additional customs details such as HS codes, country of origin, and Incoterms, plus applicable tax IDs. Requirements vary by country.

How does Deel help with invoices? Deel supports contractor invoicing and payments by allowing invoice submission through the platform, automated recurring invoices, and compliant payment processing across jurisdictions.