An item invoice is an invoice which contains a Quantity and a Unit Price which derive a Total. Usually Item Invoices are for the purchase of physical goods.
Here is a an example of an item invoice. This picture shows the line item grid area of a fairly standard invoice.
In InvoiceSmash an item invoice resolve against the inventory items in your accounting system (assuming you have them). If your business doesn’t use inventory (you specify this when configuring the connection) item invoices are converted to a service invoices and the Quantity and Unit Price data is ignored.
A service invoice is usually not about physical items. They don’t usually don’t have a Quantity and Unit Price column. Below is an example of a basic service invoice.
In InvoiceSmash service invoices are coded against the General Ledger codes (as opposed to Inventory).
So far the two types of invoices shown above are straight forward to distinguish. But that’s not the end of the story. Some times an invoice is created by a supplier which has a Quantity and Unit Price and is structured like an item invoice but isn’t really about physical things. Let take a look at an example.
You see that all the columns necessary to make an item invoice are present but that the details of what is being bought/sold doesn’t relate to physical goods that can be inventoried. Therefore it actually an invoice for the trading of services rather than goods. One of the shortcuts for confirming it is a service invoice masquerading as an item invoice is if there is a part unit (eg 0.5 quantity) in one of the lines. It makes sense to buy half a day, but usually not a half a box of soft drink. So humans can easily make that distinction (and if you’ve being doing bookkeeping or accounting for awhile you barely even have to think about this nuance) but software is not so nuanced.
However InvoiceSmash does solve this problem for you.
Here is how it works. InvoiceSmash will extract the data as an Item invoice. You then tell InvoiceSmash to switch it to a service invoice by clicking the following button on the submission screen.
That button will then send the invoice back to resolve the general ledger rules and create a rule for that supplier that will automatically do that next time. After that you can submit it as a normal service invoice.
So there are three types of Invoices
An Item Invoice resolves against Inventory/Items
A Service Invoice resolves against General Ledger codes
A Service Invoice Masquerading as an Item Invoice resolves against General Ledger codes after you create a switching rule.
Hope this helps.
Coming soon: Statement vs Hybrid Invoice Statement.