As a business owner, you`re likely to come across two vital documents when dealing with your customers: the purchase agreement and the invoice. While both documents are crucial in the sales process, they serve different purposes. In this article, we`ll explore the difference between a purchase agreement and an invoice.
What is a Purchase Agreement?
A purchase agreement is a legal document that outlines the terms and conditions of a sale between a buyer and a seller. The document details the product or service being sold, the price, payment terms, delivery date and any warranties or guarantees applied to the product or service.
The purchase agreement is typically created and agreed upon before the sale takes place and forms the basis of the transaction. Once agreed upon, the purchase agreement becomes a legally binding contract that both the buyer and seller must adhere to.
What is an Invoice?
An invoice is a document that outlines the details of the transaction after the sale has taken place. It is a bill that the seller sends to the buyer, requesting payment for the goods or services sold.
The invoice typically contains details such as the buyer and seller`s names and addresses, the date of the sale, a description of the goods or services sold, the price, any taxes or additional charges, and the payment terms.
The invoice serves as a record of the transaction and provides a means for the seller to track their sales and revenue. It also ensures that the buyer is aware of the total cost of the goods or services and any additional fees that may be applied.
Key Differences between a Purchase Agreement and an Invoice
The key difference between a purchase agreement and an invoice is the timing of their usage. A purchase agreement is created and agreed upon before the sale takes place, whereas an invoice is created after the sale has taken place.
A purchase agreement is a legally binding contract that outlines the terms of the transaction. It serves as a reference point for both parties in the event of any disputes. An invoice, on the other hand, is a record of the sale that outlines the details of the transaction and serves as a request for payment.
In summary, the purchase agreement and the invoice are both essential documents in the sales process. They serve different purposes, with the purchase agreement outlining the terms of the transaction before it takes place and the invoice detailing the sale after it has taken place. Understanding the differences between these documents will help you navigate the sales process with ease and ensure that your business is operating legally and efficiently.
