Invoice

What Is an Invoice?

An invoice is a commercial document issued by a seller (vendor, supplier, or service provider) to a buyer, itemizing goods delivered or services rendered and specifying the amount owed. It is the primary document that triggers the accounts payable process on the buyer's side and the accounts receivable process on the seller's side.

Key Components of an Invoice

A complete invoice typically contains:

Vendor information — The seller's business name, address, phone, email, and tax ID. This identifies who is requesting payment.

Buyer information — The "Bill To" section identifying the purchasing business or individual.

Invoice number — A unique identifier assigned by the vendor. Critical for duplicate detection, audit trails, and payment matching. Two invoices from the same vendor with the same number are almost certainly duplicates.

Invoice date — The date the invoice was issued. Used to determine the accounting period for accrual-basis bookkeeping.

Due date — When payment is expected, derived from the invoice date plus payment terms (e.g., Net 30 means the due date is 30 days after the invoice date).

Line items — Individual charges with descriptions, quantities, unit prices, and line totals.

Subtotal — Sum of all line items before tax.

Tax amount and rate — Sales tax, VAT, GST, or HST depending on jurisdiction.

Total amount due — Subtotal plus tax. The amount to be paid.

Payment terms — Conditions for payment (Net 30, 2/10 Net 30, etc.).

Remittance information — Bank account, check payee, or payment portal for completing payment.

Invoice vs. Receipt vs. Statement vs. Purchase Order

These four documents are frequently confused:

• An invoice is a payment request issued before payment is received.
• A receipt confirms payment has been made. It is issued after the transaction.
• A statement is a periodic summary of outstanding invoices and payments — a running balance, not a request for any single payment.
• A purchase order is buyer-generated and precedes the invoice — it authorizes the purchase. The invoice is the supplier's response to a fulfilled PO.

Invoice Processing in Accounts Payable

When a buyer receives an invoice, it enters the AP workflow: the invoice is captured (received and filed), data is entered into the accounting system as a vendor bill, the bill may be coded to GL accounts, approved, and then paid. The invoice number is the linking key throughout this process.

Why Invoice Number Matters for Duplicate Detection

Vendor invoice numbers are the primary tool for preventing duplicate payments. If the same invoice is submitted twice — whether accidentally or fraudulently — a system checking for duplicate invoice numbers from the same vendor will catch it. This makes accurate invoice number extraction essential for any AP automation tool.

Digital vs. Paper Invoices

Paper invoices must be scanned before they can be processed digitally. Digital invoices arrive as PDF email attachments, through vendor portals, or in structured formats like EDI (Electronic Data Interchange) or XML. PDFs are by far the most common format for small and mid-sized businesses.

Common Invoice Formats

PDF — Most common for SMB. Can be native digital (text-selectable) or scanned (image-only). AI extraction handles both; scanned PDFs have slightly lower accuracy.

Email body — Some vendors embed invoice details directly in email text rather than attaching a file. Less common for formal invoices.

EDI — Structured electronic format used in large-enterprise supply chains (EDI 810 is the standard invoice transaction set). Not common below mid-market.

CSV/Excel — Some vendors provide invoices in spreadsheet format. Easy to parse but inconsistent in structure.