Every company must strictly follow the rules dictated by the competent authorities regarding invoice management. This concerns in particular the compulsory mentions to be used, the conservation procedures and the upcoming obligation of the electronic invoicing. For the company, this allows for robust and unambiguous internal accounting while avoiding possible penal, fiscal or pecuniary sanctions. The transparency of operations between the company and its partners is reinforced.
What is invoicing?
Invoicing is a continuous process that allows precise and detailed traceability of the goods or services provided by a company. For this purpose, invoices are drawn up which are documents of commercial, legal and accounting value. They establish the nature, quantity and conditions of a commercial action (purchase/sale of products, goods or services). Invoicing is required for all companies, regardless of their legal status (EI, EIRL, SA, SARL, SAS, SNC, EURL, SASU, SCA, SCS, Micro-enterprise…) and size (SME, ETI, GE).
Mandatory invoicing rules
The General Tax Code and the Commercial Code define the obligation to invoice for each company. Rules are thus provided to guarantee the legality of the invoicing in a timeless way.
Billing between professionals
When a sale of goods or a provision of services is carried out between professionals, the transaction must obligatorily give rise to the establishment and the transmission of an invoice of the supplier to his customer. Traders or artisans issue invoices while the liberal professions produce fees. The country of origin as well as whether or not the customer is subject to VAT is irrelevant. Only from a fiscal point of view, some activities exempted from VAT can escape invoicing according to articles 261 to 261 E of the General Tax Code.
Billing between a professional and an individual
Every business must charge for the provision of a good or service when required by its individual customer, regardless of the amount of the transaction. According to the tax law, in the case of an individual, the issuance of an invoice to the purchaser is mandatory for:
- The distance selling operations
- The deliveries at public auction of antiques, second-hand goods, works of art, collectors’ items
According to the commercial legislation, the note (document with less compulsory mentions than the invoice) must be delivered to an individual for certain services. This includes the execution of real estate works or any service whose price including all taxes exceeds 25 euros.
The date of invoicing
For a service, the invoice must be issued on the day the service is completed. For a sale of product or goods, the invoice can be issued upon delivery of the goods. However, this can happen upstream, on the day the company accepts the order.
The date of issue of the invoicing
Invoicing is normally carried out on the date of delivery, the date on which the goods or service permanently change ownership. This date must not be later than 1 month after delivery.
The invoice numbering rules
Since numbers are part of the mandatory information on an invoice, each document has a unique number based on a continuous chronological sequence. In other words, the numbers are assigned without any gaps and follow each other over time as the bills are issued. The issuance of an a posteriori backdated document is prohibited. Each company chooses the numbering system that suits it: time prefix followed by a sequence of digits, a specific prefix followed by a sequence of digits or a simple sequential sequence.
Mandatory information for invoicing
We have as general compulsory mentions:
- The information about the service provider (the registration number in the trade and companies register, the SIREN number, the intra-community VAT number, the legal form of the company, the share capital, the name of the seller, his address (his registered office), the RCS number for traders, the RM number for craftsmen, the professional insurance taken out for craftsmen and self-employed workers…
- The name and contact information of the buyer
- The date of issue of the invoice
- The invoice number
- The quantity of goods delivered / provision of services, the unit price excluding tax and the precise name of each order
- Possible surcharges (transport costs, insurance, etc.), rebates, discounts
- Any discount conditions
- The fixed compensation for collection costs in case of late payment (transaction between professionals)
- The purchase order number previously established by the provider
- The delivery date if it differs from the billing date
- The billing address of the parties when the delivery address is different from the buyer’s address
- The terms of payment for late payment penalties
Mandatory information is required with regard to VAT:
- The applicable VAT rate, the amount of VAT to be paid and the amount including all taxes
- The VAT identification number of the service provider and the customer for invoices with an amount inclusive of more than 150 euros
- The mention of a provision of the CGI implying an exemption from VAT for the operation in question (basic exemption, exports, intra-Community supply of goods/services…)
- The mentions “reverse charge”, “self-billing” following the recommendations of the CGI
Rules for the transmission of invoices
In France, the invoice is established in two copies and normally written in French. The reference currency is the euro. The invoice must be sent as soon as the sale or service is completed. However, by mutual agreement, the company may defer transmission of the document to its client. Invoices can be sent in paper form by mail or delivered by hand. If the customer agrees, the company can send the invoice electronically.
Obligations to keep customer invoices
In order to serve as tax, accounting or legal evidence at the appropriate time, customer invoices must be kept for several years. Invoices are kept in paper or electronic format. A paper invoice can be kept electronically in compliance with the provisions of articles A102 B-1 and B-2 of the Tax Procedures Book.
The tax law provides for a retention period of 6 years from the date of establishment or the date of the last transaction indicated on the company’s records. The Commercial Code stipulates that customer invoices must be kept for at least 10 years from the closing date of the financial year.
Modify, cancel or delete an invoice
It is not possible to simply delete an invoice. However, modification or cancellation due to an error or omission is possible. A new invoice can be issued to replace the previous one. The new document must nevertheless clearly mention the cancellation of the replaced document. A credit note can also be issued with reference to the invoice in question.
Late penalties on unpaid invoices
These are penalties that apply automatically when the buyer does not pay what is due within the time limits defined on the invoice or in the company’s general sales conditions (GSC). They are not subject to VAT. Penalties are calculated on the amount including VAT. In general, the rate used is the semi-annual refinancing rate of the European Central Bank. To increase the deterrent nature of the penalty, some companies choose to multiply the ECB rate by 3 or 4.
Types of invoices in accounting
Depending on the specific conditions of a business transaction, there are several types of invoices.
The real invoice
It is the document issued definitively after the sale of the goods or the provision of services has been completed.
The invoice of must
It attests to the buyer’s debt to the seller following the transaction.
The closing invoice
It ends a contract between the company and its customer. In other words, it interrupts your partner’s consumption period by indicating the amount still due.
The pro forma invoice
It is temporary and has no accounting or legal value. It is presented as an invoice, but it is actually an official quotation mentioning the terms and conditions and the prices charged.
It works like a down payment invoice sent several times a year to the customer. The payment of a large sum of money is thus spread out for the latter.
The adjustment invoice
This invoice regularizes the payment according to the actual services provided.
The down payment invoice
It is used when the customer pays a portion of the final amount before the service is rendered or the goods are delivered.
The credit note invoice
Still called a credit note, it has the value of an IOU sent to the customer to correct a billing error. It facilitates the correction of amounts recorded in the company’s accounting.
Electronic invoicing mandatory from 2023
Securing commercial exchanges, reducing invoicing costs, limiting disputes related to payment deadlines, improving accounting, effectively preventing/fighting VAT fraud, better real-time knowledge of company activity… There are many reasons why the government wants to make electronic invoicing mandatory in 2023 and at the latest in 2025. Section 153 of the Finance Act 2020 specifies the terms of this reform for business-to-business exchanges.
The electronic invoice is an invoice for which all the stages of creation and transmission without exception are carried out thanks to a digital tool. To give it a legal and accounting value, it must be perfectly readable (for computer programs and human beings), authentic and unalterable.
The different formats of electronic invoicing
There are three types of electronic invoices:
- The invoice in PDF format: it is currently widely used by small businesses (this format should completely disappear by 2023 in view of the recommendations of the 2020 finance law)
- Structured electronic invoices in XML or EDI format: the information is illegible for humans, but adapted for optimal use by software (this format is used by large structures with dematerialized portals or APIs)
- The mixed format combining PDF and XML (Factur-X): it should become the standard in 2023, because it contains structured data for machines, but readable for human beings
Who is concerned by the VAT anti-fraud law?
VAT-registered companies that offer services or deliver goods without invoicing to private customers are mainly affected. However, a company subject to VAT is not taken into account by the anti-fraud law in the following cases:
- The services provided are only intended for professionals
- The activities are fully exempt from VAT under the provisions of the CGI
- Your activity benefits from the exemption on the basis of VAT
- The company is placed under the agricultural flat rate reimbursement system
Moreover, the anti-fraud law excludes all autoentrepreneurs.
Sanctions in the event of non-compliance
In the event of a tax audit, the company is required to provide the relevant authorities with a certificate of compliance of the electronic invoicing software with the requirements of the anti-fraud law. It is provided by the software publisher. If this is not the case, it risks a fine of 7500 euros. It is given 60 days to comply with the standards. After this period, another check is performed to verify the compliance of the software. A further fine of 7500 euros can be applied if the company is still not up to standard.
The benefits of electronic invoicing
Taking into account your budget, the intuitiveness of the solution and the strict compliance with VAT anti-fraud standards (security, inalterability, data retention and archiving), you can choose a good e-invoicing software such as our MoneyRoad invoicing orchestrator. It is available without subscription and allows you to have the digital payment in real time with the Request To Pay service, as well as to negotiate the payment terms. The advantages are multiple: centralization of customer data, optimization of billing management for the accounting department (significant time savings), good relationship with the tax authorities, maximum limitation of numbering or calculation errors/omissions.