Definition
An incoming invoice is an invoice document. It is sent to a company on the basis of a service received. The incoming invoice prompts a company to settle an outstanding receivable from a supplier or service provider within the framework of receivables management.
Structure & Content of an Incoming Invoice
Incoming invoices, similar to a invoice, have certain details that are required to be stated. These include:
- Full name & address of the invoice issuer and recipient
- Invoice number
- Invoice date
- Tax number / VAT ID
- Quantity & type of goods delivered
- Date of delivery / service
- Amount charged
- Applied tax rates
- Granted discounts, early payment discounts, bonuses, etc.
Incoming invoices must also be retained in paper form for 10 years.
Difference Between Incoming Invoice and Outgoing Invoice
Incoming Invoice:
A supplier or service provider invoices a company for an outstanding receivable.
Outgoing Invoice:
The company itself issues an invoice to a customer for the deliveries or services it has provided.
Input Tax Deduction via the Incoming Invoice
Companies can reclaim the VAT on an incoming invoice from the tax office. This reduces the taxes the company itself has to pay for its own products or services at the tax office. This process is referred to as input tax deduction.