1. Performa Invoice
It is a document sent prior to the actual sale to the buyer. It informs the buyer about the amount he is required to pay for the specified goods purchased by him. It provides almost the same information as an invoice provides. It is sent in the following cases:
- When goods are sent on consignment basis.
- When goods are sent abroad.
- When supplier expects payment before dispatch of goods.
It is a document sent by the seller to the buyer when goods are supplied. It is a document which shows the nature rates and terms of payment at which goods will be dispatched. Invoice perform the following functions:
- It help the buyer to locate error in the order and supply of goods.
- It is a basis for recording transactions.
- It informs the buyer about the dispatch of goods.
- Seller can have an idea of the amount to be collected from buyer.
3. Debit Note
It is a document prepared by one party (either by the seller or the buyer) to inform the other party (either the seller or the buyer) that receiver’s account has been debited with the specified amount and for the specified reasons.
Seller may send a debit note to the buyer in the following cases:
- When the goods are undercharged in the invoice.
- When some goods are not included in the invoice by mistake.
- When some more items have been sent than invoiced.
Buyer may send a debit note to the seller in the following cases:
- When the goods are returned by the purchaser to the seller and seller is ready to give allowance to the buyer for the same.
- When the seller failed to sent same goods charged in the invoice.
- When the price charged in the invoice is higher.
4. Credit Note
It is a document prepared by one party (buyer or seller) to be sent to another party (buyer or seller) to inform the receiver that his account has been credited with the amount mentioned and for the reasons stated therein.
A seller may send a credit note to the buyer in the following cases:
- When goods are returned by the purchaser.
- When same goods are damaged and acceptance has been made by the buyer at a reduced price.
- When less goods have been sent than invoiced.
A buyer may send a credit note to the seller in the following cases:
- When the seller has by mistake sent more goods than invoiced.
- When same item has not been charged in the invoice by mistake.
4. Lorry Receipt (LR)
When the goods are sent through a transport company, a Lorry Receipt is issued by Transport Company at the time of booking.
- Name, address and phone number of the transporter.
- Name, address and phone number of the sender.
- Name, address and phone number of the person to whom the goods are likely to be delivered.
5. Terms of Trade
Cash on Delivery (COD): It is a type of transaction in which payment for goods is made at the time of delivery. If the purchaser does not make payment when the goods are delivered, then the goodwill be returned to the seller.
Free on Board (FOB): This include all charges at the post of shipment up to the loading of goods on board the ship and export duty, if any.
Cost, Insurance and Freight (CIF): This includes the cost of goods all expenses incurred for taking the goods to the post of destinations and insurance charges.
Errors and Omissions Excepted (E & OE): It is expression that is used as a disclaimer against clerical errors.