Col­lec­tive invoice: settling multiple collected orders

The prin­ci­ples of proper ac­count­ing state that each and every trans­ac­tion made by a business must be proved by means of an invoice. The same cal­cu­la­tion however, can be used for multiple business trans­ac­tions. When doing so, the term col­lec­tive invoice is used.  

A col­lec­tive invoice is an invoice for several goods or services provided to a customer within the agreed upon billing period. But what is the advantage of col­lec­tive billing versus in­di­vid­ual state­ments? And what do en­tre­pre­neurs need to consider when they combine several trans­ac­tions into a single invoice?

As a summary invoice for several orders, a col­lec­tive invoice can always be made available if a business provides regular services for a single customer over a longer period of time, and wants to settle these pe­ri­od­i­cal­ly. The goal is effective, low-cost ac­count­ing. If several business trans­ac­tions ac­cu­mu­late and are then paid off by the customer, there are fewer account trans­ac­tions. In turn, this leads to fewer trans­ac­tion fees for busi­ness­es and customers alike, as well as saving money.

In practice, col­lec­tive invoices are always used when de­liv­er­ies to regular customers need to be billed ef­fi­cient­ly and cost-ef­fec­tive­ly for both suppliers, and customers. Here is an example:

Mr. Smith, the master painter, ordered paints, brushes and other materials for his company from the same whole­saler. Instead of paying for each material in­di­vid­u­al­ly, he settles out­stand­ing invoices on a monthly basis. As a result of this, the whole­saler completes each order with a separate delivery note, and issues Mr. Smith with a col­lec­tive invoice for all services incurred during the billing period (the last month).

Another area where col­lec­tive invoices are helpful is long-term supply agree­ments. For example, the invoice from the elec­tric­i­ty provider rep­re­sents a col­lec­tive bill over the agreed upon billing period. Physi­cians and hospitals generally issue col­lec­tive invoices to health insurance companies, which summarize the in­di­vid­ual state­ments on the health services provided. The same is done for any billing which may fall directly to the patients them­selves if their health insurance does not cover a specific procedure.

Col­lec­tive invoicing is subject to the same re­quire­ments as in­di­vid­ual invoices. While there are no pre­vail­ing legal re­quire­ments for an invoice at federal level in the USA, your business may be subject to state invoicing guide­lines, so it would be in your interest to consult these before taking steps towards creating a col­lec­tive invoice. That having been said, it is best practice to ensure that your col­lec­tive invoice provides the same in­for­ma­tion as an in­di­vid­ual invoice for each item or service.

In­for­ma­tion provided to the supplier should include:

• Supplier Name
• Supplier Address
• Supplier’s VAT reg­is­tra­tion number
• Supplier’s telephone number, contact person and email address
• Bank In­for­ma­tion (SWIFT code in the USA, bank name, address and account number)

In­for­ma­tion provided to the account holder should include:

• Name of legal entity and invoice address as stated in the purchase order
• Account holder’s purchase order number (one purchase order per invoice).

 Rec­om­mend­ed in­for­ma­tion:

• The word INVOICE or CREDIT
• Invoice number
• Invoice date
• Currency type (monetary code, eg. USD). This will be the same currency as stated in the Purchase Order
• Spec­i­fi­ca­tion of goods and services delivered; line items in the purchase order should match the invoice
• Total net amount
• Tax amount. If multiple taxes are ap­plic­a­ble, the tax rate for every net amount should be specified.
• For credit notes, invoice numbers being credited must be stated (one credit note per invoice).

In addition, the BMF stresses the following ad­di­tion­al re­quire­ments for summary invoices:

• The col­lec­tive invoice must summarize the charges for the in­di­vid­ual sales of a transfer period. The same applies for any ad­di­tion­al tax amounts accrued.
• If this in­for­ma­tion is not provided on the col­lec­tive invoice, you can refer to the sup­ple­men­tary documents.

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