A simplified invoice is a type of VAT invoice that can be sent to detail a domestic retail transaction totaling less than a certain set threshold. This threshold varies by country. For example, in the UK, this threshold is £250. In Italy, it's €400.
A simplified invoice is a form of VAT invoice that can be sent for lower value orders. As the name suggests, they contain less of the information you’d typically expect to include on a standard VAT invoice.
A simplified invoice still functions like a VAT invoice. It lays out the details relating to a specific, taxable transaction and provides all associated information required by VAT law.
The only difference between a standard VAT invoice and a simplified invoice is the amount of detail given about the transaction being documented.
Again—the total amount billed on the invoice will dictate whether or not a simplified invoice can be sent. It must fall below the relevant country’s threshold.
A simplified invoice may not require all of the elements demanded of a standard VAT invoice, but some essential inclusions exist. The following information should always be present on your simplified invoices:
Unique invoice number
This is a unique number that helps to identify the invoice within your own accounting system. You can also use it to track payments made by requesting that this number be used to identify any associated transactions.
Date of issue
Include the date of supply (sometimes referred to as “tax point.”)
Your business name & address
Include everything needed to identify and contact the supplier sending the invoice. Make sure your company name, address, and contact information are clearly stated. Consider the different ways a customer may like to get in touch and provide a few options.
Your tax ID
You need to include information that can help identify your business regarding tax. Depending on your location, this might be a value-added tax (VAT) or goods and services tax (GST) number, for example.
A description of goods or services sold
Your invoice should give a clear description of the items purchased and the quantity of each.
Tax rates charged per item
Provide the VAT rate for every item on the simplified invoice. If an item is VAT exempt or zero-rated, the invoice must still clearly demonstrate that there’s no VAT due on that item.
Total amount due
Include a clear total. This should be inclusive of all VAT.
As you’d expect from a simplified invoice, some details can be left out to keep these lower-value orders streamlined.
You don’t need to add any of the following to a simplified invoice:
- Customer’s name
- Customer’s address
- The date the invoice was issued
- Detailed information about prices or VAT (e.g., the cost of each item before VAT and the total before VAT is applied. You just need to include the total amount owed, inclusive of VAT.)
We’ve explored the essential information you must include on your simplified invoices. But what else should we pay careful attention to? How about the way your simplified invoice is presented? After all, you will still want to communicate your branding, and perhaps even a short greeting or word of thanks?
The best simplified invoices go beyond offering a quick and efficient path to payment. They’re an opportunity to connect with and impress your customers.
Trust is an important factor in any business, and this is especially true when it comes to requests for payment. Issuing a generic invoice that doesn’t feature your company branding does nothing to reassure your customer of your professionalism or concern for their experience.
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Even a simplified invoice gives you a chance to create an excellent branding touchpoint. By taking a little care over the design of your documents, you can keep things feeling consistent, inspiring trust from your customers.
Your simplified invoices may be minimal, but they can still help to maximize your customer relationship.