Billing is not always easy for beginners to understand, with its own specific vocabulary and practices.
Many terms are used in this activity, which is vital for businesses, and some of these terms have taken on a whole new meaning as technological developments have transformed accounting.
The most commonly used terms are as follows:
Accounts receivable
This is an amount owed by a customer to a company that has sold them goods or services.
Accounts receivable are established between the creditor and the debtor through invoices.
They can be collected as soon as the due date has passed, which must be indicated on the invoices.
As a debtor using Frisbii, you can easily manage all your customer receivables thanks to dashboards generated from billing data.
Archiving
Keeping invoices, both those issued to customers and those received from suppliers, is a legal requirement.
The law requires that they be archived for at least 6 years in order to be able to prove the accuracy of previous tax returns.
As a cloud solution, Frisbii greatly facilitates the archiving of these documents containing sensitive data, relying on Salesforce technology to better secure them.
Due date
This refers to the date by which an invoice must be paid by the customer to whom it is addressed.
It is a mandatory item that must appear on invoices.
After this date, late payment penalties may apply.
Down Payment
This is a partial payment of an invoice at the time of contract conclusion or upon partial performance of the service.
It therefore represents the first payment on the total amount of the invoice for the product or service.
The deposit commits both the buyer and the seller to comply with the contract:
The buyer proves their genuine interest in paying and can no longer renounce the purchase unless they reach an agreement with the seller.
The seller undertakes to provide the goods or services.
This is an effective way to secure cash flow on the one hand and limit the risk of non-payment on the other.
In Frisbii, a Down Payment subtype is applicable to mark them as such.
Detailed invoices and billing schedules can also easily integrate them, especially in the case of multiple down payments.
Escompte
This is a short-term credit technique that allows a company to receive immediate payments even before the due date.
It is not free of charge, but it does provide a cash advance.
Intra-community VAT number
A personalized tax identification number specific to a company, issued by the tax authorities. Its usefulness lies in the fact that it simplifies commercial exchanges between organizations within the European Union.
Invoice to be issued
Unlike deferred income, invoices to be prepared correspond to income that has not been invoiced at the end of the fiscal year, even though the goods have already been delivered (or the service has been provided).
As the revenue has been earned, the margin should be recognized in the relevant fiscal year.
Locked invoice
The invoice has been issued and can no longer be modified either electronically or legally.
Payment terms
The time limits for paying an invoice. Examples: Cash, 30 days net, 45 days net, etc.
The maximum time limits are listed in this article: Accounting concepts - French regulations (then click on Maximum payment time limit).
Pro forma invoice
A pro forma invoice is an invoice that is correct “in form” but has no accounting value.
It allows the terms and conditions of purchase for a product to be defined precisely.
It serves as a quote.
VAT (Value Added Tax)
Any company or independent professional who regularly carries out paid economic transactions within the European Union is subject to VAT.
This tax is charged directly to customers on the goods they consume or the services they use. It is up to professionals to collect it on these taxable transactions and declare it.