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What Is The Difference Between An Invoice & Packing Slip?

Companies of all sizes can sometimes face complex procurement problems. But one of the most enduring (and occasionally frustrating!) challenges comes not from advanced spend management or policy, but confusion between two of the most basic items in the procurement world: the packing slip and the invoice.

Understanding the difference between these two common but critically important procurement documents is essential to paying vendors on time, avoiding financial and tax issues, and making sure your company receives all the goods and services it purchases.

Packing Slip vs. Invoice

While the terms might be used interchangeably in some circles—and can be very effectively managed if you’ve integrated top-notch e-Procurement software with your accounting and enterprise resource planning (ERP) solutions—packing slips and invoices have distinct roles in the procurement process. They’re both connected to the transfer of goods and services, but packing slips deal with actual materials and products, while invoices are tied to the financial component of these transactions.

Packing Slips

Also known as a shipping list, manifest, packing list, packaging slip, or waybill, a packing slip details the contents of a package so the vendor and the purchaser can confirm the physical products listed were sent and received, respectively.

Shipping documents like this are especially helpful for orders that arrive in multiple packages, as they make it easier to identify and track everything tied to the order. A shipment with no packing slip is one that can cause headaches for the seller and the buyer, since items could easily go missing, become damaged or even be replaced with the wrong items.

A typical packing slip will contain information such as:

  • Date of order
  • Packing slip number
  • Purchase order number (if cross-linked)
  • Shipping address
  • Contact information
  • An itemized list of the physical goods ordered
  • An itemized list of the physical goods shipped
  • An itemized list of any items in the same order but shipping separately
  • An itemized list out of stock items that may need to be reordered
  • The quantity of each item listed
  • General size and weight information for each item
  • Stock Keeping Unit (SKU) numbers and/or Universal Product Codes (UPCs) for each item

Packing slips will usually be printed, placed in a shipping pouch, and attached to the shipment by staff members in the vendor’s shipping department and used to confirm everything in the order is included when the order reaches the receiving department of the purchaser. They may or may not pull double duty as both a packing list and a shipping label.

For international shipments, Customs may use the packing slip, paired with the associated invoice, to estimate the total value of the shipment and charge the appropriate fees.

Packing slips are not generally issued for services or by service-based businesses, as their “products” are intangible.

“Packing slips and invoices have distinct roles in the procurement process. They’re both connected to the transfer of goods and services, but packing slips deal with actual materials and products, while invoices are tied to the financial component of these transactions.”

Invoices

At a glance, the average invoice looks a lot like a packing slip. However, it’s a billing document, focused on verification of payment rather than receipt of goods, which is why you might know it as the bill, a sales invoice, or even “the tab.” It’s a legally-binding document, rather than simply a detailed checklist. It also contains a billing address as well as a shipping address, since the department or company paying for the products or services might not be the same as the one ordering them.

If a purchase order (PO) was used by the buyer, then the invoice should also contain the PO number for cross-referencing—another task greatly simplified with the help of e-Procurement software!

In addition, an invoice won’t contain a list of items that were out of stock when ordered, since the recipient won’t be billed for them.

A typical invoice includes information such as:

  • Date of order
  • Invoice number
  • Packing slip number (if cross-linked)
  • Purchase order number (if cross-linked)
  • Shipping address
  • Billing address
  • Contact information
  • An itemized list of the physical goods ordered
  • An itemized list of the physical goods shipped
  • An itemized list of any items in the same order but shipping separately
  • The quantity of each item listed
  • General size and weight information for each item
  • Stock Keeping Unit (SKU) numbers and/or Universal Product Codes (UPCs) for each item
  • Payment terms, including available payment methods
  • Payment due date
  • For pre-paid orders, the payment date, method, and confirmation number (if any)
  • Region-specific information for tax purposes, e.g. Value Added Tax (VAT) ID number

Invoices are issued by accounts receivable departments and are sent to accounts payable teams. Both parties use invoices to track payment due dates, verify payment, and provide documentation for company financial records.

A Special Case: Commercial Invoices

Global suppliers selling goods to customers in the United States may use what’s known as a commercial invoice, along with a packing list. A commercial invoice is more detailed than its everyday counterpart. In addition to the standard information, it includes information about each item’s place of manufacturing, as well as each item’s value in both U.S. currency and the currency used in the supplier’s country of origin. It also includes a thorough product description for each item, along with its composition and intended use.

To avoid delays and extra fees, it’s essential that the information listed on a commercial invoice match the accompanying packing list. Customs uses these shipping documents to determine value and calculate fees and taxes, so if they aren’t included or don’t match, Customs agents may estimate the value of the shipment based on available information, resulting in higher import fees for the buyer.

Two Sides of the Supply Chain Coin

It’s easier to manage the physical and financial aspects of procurement when you’ve mastered packing slips and invoices. Deploy a centralized software solution makes this process even smoother. With the packing slip, invoice, purchase order, and other documents linked in one system, you can avoid costly shipping errors, unauthorized purchases, and customs fees while ensuring all your invoices are paid, tracked, and documented for planning and tax purposes.

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What Is The Difference Between An Invoice & Packing Slip?