What is the purpose of an invoice?

An invoice serves as a critical document in the accounts payable process, primarily designed to request payment for goods or services that have been provided to a customer. It formally details what has been delivered, the agreed-upon prices, and the terms of payment. An invoice acts as a legal document that records the transaction between the seller and the buyer, and it includes important information such as item descriptions, quantities, prices, and total amounts due.

While budgeting, ordering products, and tracking shipments are all important processes in business operations, they do not encompass the primary function of an invoice. Invoices specifically focus on the request for payment and the documentation of a sale, making it essential for both accounting and financial management. By generating an invoice, businesses ensure there is a record that can be referenced if payment disputes arise and enable cash flow management by signaling when funds are expected to be received.