What is an invoice?
An invoice is a bill or receipt primarily used by B2B companies with a CVR number.
The invoice specifies and demands payment for the goods or services agreed upon between the supplier/seller and the customer/buyer. It is used to collect money from the buyer as well as for documentation in both the seller’s and the buyer’s accounts.
For example, if you have hired a painter to paint your house, you will receive an invoice when the painter has finished the job.
You can handle electronic invoices automatically with Acubiz
Efficient invoice management can, among other things, help with getting a better overview and a more efficient and flexible approval process concerning cost invoices.
What is a partial invoice?
Content requirements and other facts about invoices
There are several legal requirements for the design of an invoice that you must comply with. An invoice must include, at a minimum:
- Invoice number
- Date of issue
- Buyer’s name and address (and CVR number if it is a company)
- Seller’s name, address, and CVR number
- Specification of the item or service, including price and quantity
- VAT and the total amount (VAT amount must be on the invoice to be eligible for VAT deduction)
- Any other taxes or fees
- Any total amount for the invoice
The different types of invoices
An invoice can be sent and received both analog and digital. There are different types of invoices and ways to send them, including invoices, e-invoices, online invoices, EAN invoices, proforma invoices, etc.
Below you can learn more about each type:
- E-invoice – an electronic version of an invoice that can be sent and received digitally.
- Online invoice – an invoice that can be accessed and paid online.
- EAN invoice – an invoice that is linked to an EAN number, which is a product identification number.
- Proforma invoice – an invoice that is issued in advance of delivery of an item.
According to Danish accounting law, invoices that are part of the company’s accounting material must be kept for five years after the end of the accounting year to which the invoices relate.
This applies to both paper-based and electronic invoices.
Overdue invoices and reminder interest on invoices
An overdue invoice is an invoice that is not paid on time.
Here, a reminder (with or without a reminder fee) is sent to remind customers that they have yet to pay the invoice within the specified payment deadline.
Interest on late payment
Interest on an invoice can be charged if a customer does not pay an invoice on time to cover the costs of sending a reminder and handling the missing payment.
In Denmark, there are rules for private companies regarding reminder fees. According to the interest law, companies may only charge interest on late payments once they have sent a reminder.
After the last due date, you may send the first reminder letter. Here, the customer must have a deadline of 10 days to pay the invoice. Interest on the invoice must be specified if they are relevant to a transaction, and they must comply with applicable law.
Be aware that there is a statute of limitations for invoices.
The latest statute of limitations law came into effect in 2008. Here, the statute of limitations for invoice claims was reduced from five to three years.
The short statute of limitations applies to unpaid bills and other receivables not secured by a signature or a judgement.
At the same time, stricter requirements were introduced for interrupting the limitation period, where it is no longer sufficient to simply inform the customer of the claim. If you, as a creditor, want to interrupt the limitation period and secure your claim, there must be an acknowledgment from the customer, or legal proceedings must have been initiated.
As a starting point, the statute of limitations for an invoice is counted from the due date on the invoice. If the creditor sends an invoice indicating the due date, the limitation period will start from this point.
What happens if an invoice statute of limitations is exceeded?
Suppose your company exceeds the statute of limitations for an invoice claim. In that case, the company loses the right to demand payment from the customer – even if the company has a reasonable claim and the customer has received the correct service.
The invoice is expired and has no value after three years.
Therefore, it is crucial that you, as a creditor, send the invoice at the same time as the work is completed so that you achieve faster payment and better liquidity. It also allows for speedier detection if a customer is dissatisfied or unwilling to pay.
A good tip is to invoice continuously and quickly to promote liquidity in the company.
Want to know more?
What happens to the invoice when the buyer receives it? It must be somehow processed/handled in an invoice workflow which results in a payment of the invoice.
This is also known as invoice management, and our solution for this is Acubiz Invoice which result in an automated and digital workflow for your accounts payable and supplier invoice process.