International invoicing has its own specifics and complexities, but first and foremost it should be seen as a essential part of running a business in order to carry out financial transactions and keep clear financial records. Invoices are not just a legal requirement, they are crucial to the smooth interaction between business and customers. If you improve your invoicing process, it will help you protect your business from common issues such as late payments or disagreements over charges.
This article delves into the importance of invoicing and highlights the key elements that should be included in every correct and internationally compliant invoice.
Steps you need to take to correctly create an international invoice in the future
- Choose the right currency for your customer billing
When invoicing international customers, it is necessary to decide on the currencies for invoicing and therefore accepting payments. Options include invoicing in the local currency of your product’s country, in your customer’s currency, or in a third-party currency such as U.S. dollars or euros. Each option has its pros and cons, considering factors such as convenience, fees and exchange rates. Clearly indicate the chosen currency on the invoice and ensure that the digit formats are consistent. This step will help you prevent confusion and ensure a smoother invoicing process.
Of course, you can go beyond one-size-fits-all but not customer-friendly options if your billing system provides you with multi-currency and smart routing like Rainex does.
- Define clear payment terms
Make sure your billing terms are crystal clear to avoid misunderstandings. Ambiguity can result in unnecessary time spent resolving issues with customers and, more importantly, delays in the payment process. We advise using simple and concise language and avoiding excessive accounting jargon. And interacting with customers in their native language reduces the likelihood of miscommunication and potential complaints.
Multilingual, fully customizable Rainex notifications that allow you to clearly and concisely communicate information to your customers will eliminate
- Choose the reliable payment method
Cross-border transactions offer a variety of payment methods, including wire bank transfers, ACH transfers, digital wallets and credit cards. Each method comes with its own set of advantages and drawbacks, ranging from speed and security to convenience and cost. It’s crucial to research the available payment options in your customer’s country, comparing factors like fees, exchange rates, recurring billing and holding time. Once you have selected one or more payment methods, clearly indicate them on the invoice and include relevant details such as a bank account number, link or QR code. This ensures a seamless and transparent payment process.
Remember, it is up to you to decide how quickly you want to get paid. Customize your payment terms to suit your business needs. Whether you prefer faster payments or extended timelines, Rainex allows you to set flexible payment terms. Additionally, our automated dunning system gently nudges customers for timely payments or brings a failed transaction to a successful payment.
- Comply with tax regulations
The fourth aspect of invoicing for international customers is complying with tax regulations applicable to your work and your customer’s location. Depending on the nature and amount of your product, you may have to charge or pay taxes, such as value-added tax (VAT), goods and services tax (GST) or sales tax. Familiarize yourself with the tax rules and rates in your customer’s country and consult a tax professional if you are unsure. Also keep track of your income and expenses and report them to the relevant authorities. Include the tax information on your invoice, such as the tax rate, the tax amount, and the tax identification number.
Or forget all the above hassles with Rainex’s automated tax determination and calculation. Learn more about this feature and comply with international tax regulations by default.
- Breakdown and specify chargeable items
Provide a breakdown of the items payable on the invoice and specify clearly each line item’s type of service. This practice not only aids in tax classification but is also crucial, as certain countries apply different taxes to rentals, services, and goods. Indicate distinctly whether these categories are separately classified, ensuring transparency and accuracy in taxes included on your invoices.
Automatically generated Rainex invoices always contain the necessary detailed information about the invoice components, the customer and your business. Fill in the data once and be sure that the invoice is correct.
- Follow the correct form and branding
Effective formatting and editing, along with a strong emphasis on branding, can enhance the professional appearance of your invoices. White-labeling invoices is crucial for showcasing professionalism, building trust, and standing out in your market. It’s like putting your business’s signature on each invoice, subtly promoting your brand with every transaction. By maintaining a consistent appearance, you become easily recognizable to clients, boosting your credibility. It’s a simple way to make your business memorable and show that you take your work seriously. Plus, it keeps you in line with legal requirements while making your brand look good.
Requirements for invoices in different countries
Each country has its own specific rules and regulations regarding invoices, making it essential to tailor your invoicing practices to each jurisdiction. Failure to adhere to these unique requirements can lead to legal complications or financial penalties. Therefore, awareness of the invoicing standards in the countries you operate in is crucial to the uninterrupted running of your business.
Principles of EU-wide rules according to the VAT Directive (Articles 217-240 VAT Directive):
- Electronic invoices are considered equivalent to paper ones, and national tax authorities cannot require additional notifications or authorizations from businesses.
- Businesses are entitled to issue electronic invoices, contingent upon recipient acceptance, while e-invoicing becomes mandatory in public procurement.
- In certain situations, businesses may outsource invoicing to a third party or the customer (self-billing).
- Businesses are generally entitled to store invoices at their discretion, whether in paper or electronic form and in an EU country other than their base.
In the USA, invoice formatting requirements are less stringent compared to other countries. Although there is no specific mandated format, it is critical to include all relevant details and attentively review for any accounting errors.
Considering the diverse regulations for invoices worldwide, we recommend including thorough details in your international product sales invoices. However, maintain clarity to ensure the invoice remains easily comprehensible.
Rainex can help you navigate these various regulations with ease, ensuring compliance and professionalism in all countries.
The most significant invoice features:
- Invoice heading. Clearly label the document as an “Invoice.” Include a unique invoice number for easy identification and tracking.
- Your company information. Full legal name, address, and contact details. VAT registration number (if applicable).
- Your customer information. Full name, address, and contact details of the customer. The customer’s VAT identification number (if applicable).
- Invoice date. The date when the invoice is issued.
- Description of goods/services. Detailed description of the goods or services provided. Quantity, unit price, and total amount for each item.
- Total amount and currency. Clearly state the total amount payable, including any applicable taxes. Specify the currency for international transactions.
- VAT details. Separate the net amount from the VAT amount. Display the VAT rate applied to each item or the total, depending on the VAT system.
- VAT registration details. Include the VAT registration number of both you as a seller and your customer (if applicable).
- Payment terms. Clearly define the payment terms, including the due date. Specify accepted payment methods.
- Additional charges or discounts. Clearly mention any additional charges or discounts applied.
- Sequential invoice numbering. Maintain a sequential numbering system for invoices.
- Legal compliance statements. Statements indicating compliance with VAT regulations and laws. Declaration of the correctness of the information provided.
- Electronic invoicing compliance (if applicable). Include any required information for electronic invoices, complying with local regulations.
- Your company’s logo (Optional). Including your business logo enhances the professionalism of the invoice.
- Record-keeping period. Advise the customer to keep the invoice for a specified period for tax auditing purposes.
Here you go – obtain a legally compliant invoice from Rainex.
Are you looking to elevate your finance processes?
Invoicing and automatic money collection on your subscriptions is one of the best places to start when it comes to enhancing your finance processes.
The rigid standards and requirements combined with digitization of invoicing enable effortless automation of this crucial task.
With Rainex, you gain complete control over automated invoicing processes, managing everything from customer invoices to revenue cycles and cutting down on the amount of administration work your team may face. The system is designed to ensure prompt payment of invoices by customers.
Want to know more about how Rainex can enhance your billing and subscription management? Book a demo with our team right now.
