Before we talk about e-Invoice: does your invoice pass?

Hook

Boss, everybody is talking about e-Invoice. But first, an honest question: does your current invoice pass? Descriptions written any old way, decimal places all over the place, returns handled by deleting the invoice. With the basics unsound, any system you put on top of it will still be a mess. Today we go through the rules of invoicing in one sitting.

An invoice that passes

An invoice that passes cannot be missing any of these. A description written for an outsider — not just "goods" or "services". Say what goods and what specification; what work was done and for which period. The standard is that a third person understands it: the auditor understands it, LHDN understands it, and you understand it yourself six months later. Units and quantity — state the unit of measure, the UOM: pieces, kilograms, hours, square feet. Set a rule for decimals: quantity may carry several, but amounts carry two, and the whole company rounds the same way, or reconciling turns into hunting a few sen. Currency — if you deal with overseas customers, mark whether it is RM or USD and note the rate. Then a sequential invoice number and a date — and the front from the twelfth lesson: logo, address, email, remarks and payment terms. Terms stated on the invoice are what you stand on when you chase payment.

Letting the money walk in by itself

An invoice is not only a record. It is a collection tool. Three modern fittings to add. A payment QR — print one on the invoice and the customer scans and pays, without asking for your account number. A payment gateway link — put a "pay here" in the electronic invoice and accept credit cards and online banking. And an automatic receipt — the moment the money arrives, the receipt is raised and sent. As the sixth lesson said: invoice fast, chase closely. The shorter the path to payment, the faster the money comes back.

The many ways of collecting in stages

Not every job is collected in one go. Some common patterns. Deposit plus final bill — raise the deposit invoice when you take the deposit, raise the final invoice on delivery, and every document states clearly the total, how much has been received and how much remains. Progress billing — the job businesses from the tenth lesson bill by stage: one for the foundation, one for the structure, one on completion, each matching the contract's progress. One invoice collected in several payments — a customer paying one invoice in three or four instalments is fine; match each receipt back to that invoice (the rule from the sixth lesson) and the balance on the statement is plain. And travel agents and tour operators take note — a lot of what you collect from a customer is collected on behalf. The airfare and the hotel money get passed on to suppliers and are not all your income. The documents have to separate what is collected and paid on behalf from your own service fee, or your revenue is inflated and the tax is wrong too.

Sold, then coming back: returns, exchanges, variants

Goods sold that come back are the real test of skill. A return and refund — never delete the invoice. Raise a credit note. The original invoice stays, the credit note reverses it, and the whole story is legible. Deleting invoices is a cardinal sin in bookkeeping, and it cannot be explained when the books are examined. An exchange — even a like-for-like swap leaves a trace: a credit note reverses the original and a new invoice covers the new item. Same model, different colour or size — for shoes and clothing, every colour and size is its own SKU, as the ninth lesson covered, so that stock keeps up when there is an exchange. Same product, different specification or model — a different model number is a different item; set it up separately, do not share a code. Same goods, different cost — new stock and old stock, batches bought at different prices, even stock that has been sitting for years: the SKU does not change, and the system handles the cost layers by its valuation method. Clearing old stock at a discount is a pricing matter; the system works the cost side out itself.

To close

All of these rules are achievable in a system like Bukku — provided it is set up correctly at the start: how items are created, how decimals are fixed, how the credit note flow runs. LTT lays these foundations for clients, so that when e-Invoice arrives, it is a shift across rather than a fresh start. One of the coming lessons is dedicated to e-Invoice. Grab a coffee first and talk about your business. For the accounting, come to LTT. I am LTT, helping SME bosses get their accounts straight. Follow us, and see you next time.