What is an Invoice? Definition, Types, and What to Include

An invoice is a document issued by a business to a client requesting payment for goods delivered or services rendered. It specifies what was provided, how much is owed, and when payment is due. Invoices serve as the official record of a transaction and are required by SARS for bookkeeping and VAT purposes.

What does an invoice include?

A standard invoice should contain:

Your business name and contact details
Your client’s name and contact details
A unique invoice number (sequential, for your records and SARS)
The invoice date
A payment due date or payment terms (e.g. “Due within 14 days”)
A description of the goods or services provided
The quantity and unit price for each line item
The subtotal
VAT (if you are VAT registered)
The total amount payable
Your banking details (for EFT payment) or a payment link

If you are VAT registered, your invoice must also include the words “Tax Invoice,” your VAT registration number, and the VAT amount shown separately. This is called a tax invoice.

Types of invoices in South Africa

Invoice type	Purpose
Standard invoice	Request for payment (non-VAT vendors)
Tax invoice	Request for payment (VAT-registered businesses)
Proforma invoice	Estimate or quote in invoice format (not a payment demand)
Recurring invoice	Automatically generated on a schedule for ongoing services
Credit note	Cancels or reduces a previously issued invoice
Debit note	Requests additional payment when original invoice was understated
Statement of account	Summary of multiple outstanding invoices for a client

Quick answer

What is an invoice?

An invoice is a commercial document issued by a seller to a buyer that records a sale and requests payment. It includes the seller’s details, the buyer’s details, a description of goods or services provided, the amount owed, and a due date for payment. In South Africa, VAT-registered businesses issue “tax invoices” which must meet specific SARS requirements including the supplier’s VAT number, the VAT amount shown separately at 15%, and a unique sequential invoice number. Non-VAT registered businesses issue standard invoices without VAT. Invoices serve as the primary financial record of a transaction for both the seller (as income evidence) and the buyer (as a deductible expense or VAT claim). SARS requires businesses to retain invoice records for at least 5 years.

Invoice vs receipt vs quote

These three documents are often confused:

Document	Sent when	Purpose
Quote	Before work begins	Proposed price for the client to accept
Invoice	After work is complete	Payment request
Receipt	After payment is received	Confirms payment was made

A quote is an offer. An invoice is a demand. A receipt is a confirmation.

How are invoices used for tax?

For the seller: Invoices are evidence of income. SARS requires you to declare all income on your tax return. Your invoices are the primary record of what you earned.

For the buyer: Invoices for business expenses can be used to support deductions on your tax return. If you are VAT registered, a valid tax invoice from a VAT-registered supplier lets you claim back the input VAT.

SARS requires businesses to keep all invoices for at least 5 years in case of an audit.

What is a proforma invoice?

A proforma invoice looks like an invoice but is not a final payment demand. It is used to give clients an advance notice of what they will be charged, before the work is complete or goods are delivered.

Common uses:

Import and export transactions (customs require a proforma invoice before the goods arrive)
Large projects where the client needs to budget or get internal approval
Situations where a deposit is required before work begins

A proforma invoice should be clearly labelled “Proforma Invoice” to distinguish it from a tax invoice. Once the work is done, you replace it with a proper invoice.

How to create an invoice

Use invoicing software (like Rebill) or a template
Add your details and the client’s details
Add line items with descriptions and amounts
Set the payment terms and due date
Add VAT if you are registered
Add your banking details or a payment link
Send by email or WhatsApp

Rebill generates SARS-compliant invoices automatically and delivers them via email or WhatsApp with a Paystack, Yoco, or PayFast payment link. The free plan covers up to 20 invoices per month.

Frequently asked questions

Is an invoice legally binding in South Africa?

An invoice is a payment demand, not a contract in itself. The underlying contract (written agreement, accepted quote, or verbal agreement) is what creates the legal obligation to pay. However, an invoice is important evidence that a transaction occurred and that payment is due. Courts routinely use invoices as evidence in debt recovery proceedings.

What is the difference between an invoice and a bill?

In everyday usage, 'invoice' and 'bill' are often used interchangeably. Technically, an invoice is issued by the seller to the buyer as a payment request, while a 'bill' is the buyer's perspective of the same document (the amount they owe). In South Africa, 'invoice' is the correct business term. 'Bill' is more common in consumer contexts (utility bills, phone bills).

Does an invoice have to be in a specific format in South Africa?

Standard invoices (non-VAT) have no prescribed format. You can use any layout as long as it includes the essential information. Tax invoices (for VAT-registered businesses) must include the specific SARS-required fields, but the layout and design are up to you. There is no requirement to use government-issued forms or templates.

How many invoices can I send per month on Rebill's free plan?

Rebill's free plan includes up to 20 invoices per month. There is no limit on the number of clients, and all invoices are SARS-compliant with professional formatting. If you need to send more than 20 invoices per month, the Premium plan at R99/month includes unlimited invoices, WhatsApp delivery, recurring billing, and additional features.