Invoicing Glossary — Every Term Explained
Clear, jargon-free definitions for invoicing, accounting, tax, and payment terms. Whether you're sending your first invoice or automating thousands, this glossary has you covered.
A
Accounts Payable
Money your business owes suppliers for goods or services received.
Accounts Receivable
Money customers owe you for invoiced sales not yet collected.
Accounts Receivable Turnover
Ratio of net credit sales to average AR, showing collection speed.
Accrual Basis Accounting
Recognize revenue and expenses when earned or incurred, not only when cash moves.
Aging Report
A list of open receivables or payables grouped by how overdue they are.
B
C
Cash Basis Accounting
Record income and expenses when cash is received or paid.
Cash on Delivery
Payment is collected when goods are delivered, not on credit terms.
Chart of Accounts
The structured list of account names and numbers used in bookkeeping.
CIUS Standard
Country-specific customization of the European semantic e-invoice model (EN 16931).
Collections Process
Formal steps to recover overdue balances, from internal chase to agencies or legal.
Commercial Invoice
A customs and trade document listing shipped goods, value, and parties.
Credit Note
A document that reduces amounts owed after returns, errors, or discounts.
Customer Churn Rate
Percentage of customers or revenue lost in a period.
D
Days Sales Outstanding (DSO)
Average days to collect payment after a sale, derived from AR and revenue.
Debit Note
A notice increasing what a buyer owes, often for extra charges or underbilling.
Deposit Invoice
Upfront billing before work starts or materials are ordered.
Discount Terms
Rules on how and when price reductions apply on an invoice.
Double-Entry Bookkeeping
Every transaction has equal debit and credit entries across accounts.
Due on Receipt
Payment is expected immediately when the customer receives the invoice.
Dunning
Automated or manual reminders when invoices or subscriptions go unpaid.
E
E-Invoicing
Structured electronic invoice exchange, often with government or network validation.
Early Payment Discount
A reduced price for paying before the standard due date.
Electronic Data Interchange (EDI)
Machine-to-machine business documents using agreed formats like EDIFACT or X12.
Exempt Supply
Supplies not subject to VAT or sales tax, with no tax on the sale.
F
G
General Ledger
The master record of all accounts and journal entries.
Goods and Services Tax (GST)
A broad consumption tax on goods and services, often with registration thresholds.
Goods Receipt
Confirmation that ordered goods or services were received as expected.
Grace Period
Extra days after the due date before penalties or suspension apply.
I
Independent Contractor
A non-employee worker engaged under contract, responsible for their own taxes and tools.
Input Tax Credit
VAT or GST paid on business purchases that you offset against output tax.
Interim Invoice
A bill for work or costs before the project or period ends.
Invoice Factoring
Selling receivables to a third party for immediate cash at a discount.
Invoice Matching
Comparing incoming invoices to POs, contracts, or receipts before approval.
Invoice Number
A unique identifier for each invoice in your numbering sequence.
L
M
N
P
Past-Due Invoice
An invoice unpaid after the due date in your payment terms.
Payment Link
A URL or button letting customers pay online by card or bank.
Payment Plan
Scheduled partial payments until a balance is cleared.
Peppol Network
A standardized network for exchanging e-invoices and catalogs across borders.
Proforma Invoice
A preliminary bill showing estimated costs before goods ship or work completes.
Progress Invoice
Billing tied to completed percentage or stages of a contract.
Purchase Order
A buyer’s authorized request specifying items, quantities, and prices.
R
Recurring Invoice
Invoices sent on a fixed schedule for subscriptions or retainers.
Remittance Advice
Notice from payer showing which invoices a payment settles.
Request for Proposal (RFP)
Buyer document inviting vendors to bid with solution and pricing details.
Retainer Agreement
Contract for ongoing access, hours, or priority for a recurring fee.
Retainer Invoice
A bill for prepaid access to services or hours over a period.
Reverse Charge
The buyer, not the seller, accounts for VAT on certain cross-border B2B supplies.
S
Sales Tax
Tax collected on retail sales, common in US states and localities.
Scope of Work
Written boundaries of deliverables, tasks, and exclusions for a project.
Self-Billing Invoice
The buyer creates the invoice on the supplier’s behalf under agreed rules.
Service Level Agreement (SLA)
Measurable service standards, often with credits or penalties for misses.
Shipping Charge
Freight or delivery fees billed on top of product or service lines.
Sole Proprietor
An individual running a business with no separate legal entity.
Statement of Work
A detailed addendum describing timeline, milestones, and acceptance for a deal.
Subtotal
Sum of line amounts before tax, shipping, and global discounts.
T
Tax Invoice
An invoice that meets legal rules so tax can be charged or reclaimed.
Tax Invoice Requirements
Mandatory fields and formats for an invoice to count for tax.
Tax Registration Threshold
Revenue or sales level at which you must register for VAT, GST, or sales tax.
Three-Way Match
Aligning purchase order, receipt, and invoice before paying a vendor.
Timesheet Invoice
An invoice built from logged hours, rates, and often approvals.
V
W
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