Invoice Item Quantity in New Zealand
The invoice item quantity is the number of units for which the customer is billed or invoiced. The number of units in the invoice are multiplied by the per-unit rate to calculate the subtotal invoice value as:
Items quantity * per unit rate = Subtotal invoice value
For example, if the customer is billed for 10 units of product A, at $5 per unit, the above formula can be used as follows:
10 * $5 = $50, which is the subtotal invoice value
It is important to ensure that there is an accurate quantity breakdown with an accurate per-unit rate in order to reach the correct invoice value. This is because there can be different units of different products in a single invoice.
Moreover, there can be different quantity metrics on the invoice, depending on the nature of the business or the convention. For instance, some sellers charge in kilograms, some in litres, some by the hour and so forth.
Importance of Invoice Item Quantity
The invoice item quantity is considered essential because of the following:
Billing accuracy
If there is an error in the invoice item quantity, this will lead to an error in the total invoice value. Take the example of 20 units of laptops detailed on the goods received note (GRN). However, you notice that there are 25 units of the laptops which are billed on the invoice for the same delivery. In this situation, there is the necessity to have the bill corrected in order for payment to be made.
Documentation
Since the item quantity on the invoice serves as a record of the sales, it helps business managers to track and manage inventory.
Compliance
It is a requirement to show the quantity of goods on an invoice. This makes the invoice a legally binding document. So, it must be prepared in compliance with applicable regulations.
Transparency and customer satisfaction
The quantity on the invoice allows the customer to have transparency in the overall bill. The customer will normally reconcile the quantity on the invoice, with the quantity on the Goods Received Note. This will reassure the customer and enables them to have confidence in the delivery and therefore encourages prompt payment.
Next will be a discussion on some frequently asked questions:
Can the Quantity be Negative?
The answer is “yes”, the invoice can be negative and this will create a credit note. This note is issued by the business in order to record sales returns in the accounting system. By posting the credit notes, the accounting system reduces previous bills (revenue) and adds back inventory into the system. So, in this way, the quantity on the invoice can also be negative.
Can the Quantity on the Invoice be in Decimal?
The quantity on the invoice can be in decimals. This precision is dependant on the accounting system that is used by the business. This is because some accounting software comes with the ability to accomodate decimals in quantity, and some do not. So, there is the need to consider business needs and conventions before selecting and implementing accounting software / invoicing software.
For example, in the case of a professional accounting firm, there may be a need to charge 0.75 hours of work billed to the client. If the accounting system does not accept quantity in decimals, this may be a problem for the business.
Conclusion
The invoice item quantity is the number of units on the invoice for which the customer is billed. The item quantity is multiplied by the per unit rate to deduce the total invoice value.
The invoice item quantity is an essential component of an invoice due to the fact that it helps in accurate billing, compliance, documentation, transparency and customer satisfaction.
If a credit note is issued, the quantity on the invoice can be negative. Generally a credit note is used to record sales returns.
The quantity on the invoice can also be in decimals. It will depend on the accounting system that is used by the business. Therefore, it is important to consider business needs and conventions for billing while implementing an accounting system.
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