The AI-Billing & International Invoicing Glossary

A payment term offering an early-payment discount: the buyer may deduct 2% if the invoice is paid within 10 days, otherwise the full amount is due within 30 days. It is used to encourage faster payment.

A US tax form issued by third-party payment platforms (such as PayPal or Stripe) reporting the gross payments a business or freelancer received through them during the year. The reporting threshold has changed in recent years, so freelancers should track platform income regardless of whether they receive the form.

The total money owed to a business by its customers for goods or services delivered but not yet paid for. Outstanding invoices sit in accounts receivable until they are settled.

A report that groups unpaid invoices by how long they have been outstanding (for example, 0–30, 31–60, and 61–90 days). It helps a business see which receivables are overdue and prioritise collections.

An amount that is unpaid and overdue, or a billing arrangement where payment is made after goods or services are delivered. An account 'in arrears' has one or more missed or late payments.

An invoice or receivable that a business no longer expects to collect and writes off as a loss. Persistent late payment and insolvency of clients are common causes of bad debt.

Creating and sending many invoices at once, often generated from a spreadsheet or CSV file. Batch (or bulk) invoicing saves time for businesses billing many clients on a regular cycle.

The hours of work a freelancer or agency can charge to a client, as opposed to non-billable time spent on admin, sales, or unpaid tasks. The ratio of billable to total hours is a key measure of utilization.

Comprobante Fiscal Digital por Internet — Mexico's mandatory electronic invoice format. Invoices must be issued as CFDI XML and validated by an authorised certification provider before they are legally valid.

A document issued by a seller that reduces the amount a customer owes, used to correct an overcharge, apply a refund, or cancel part of an invoice. It is effectively a negative invoice.

A document that increases the amount owed on a previously issued invoice, for example to charge for additional goods or to correct an undercharge. It is the opposite of a credit note.

The date by which an invoice must be paid, set by the payment terms (for example, 30 days from the invoice date). Interest and late fees generally begin to accrue the day after the due date.

The process of systematically communicating with customers to collect overdue payments, typically through a sequence of reminder messages that escalate in tone. Automated dunning sends these reminders on a schedule.

An invoice issued, transmitted, and received in a structured, machine-readable format (such as XML) that flows directly into accounting and tax-authority systems. A PDF emailed to a customer is a digital document, not a true e-invoice under most mandates.

The European standard that defines the core semantic data model for electronic invoices. Many national e-invoicing formats, including XRechnung and Peppol BIS Billing, are built on EN 16931.

Selling unpaid invoices to a third party (a factor) at a discount in exchange for immediate cash. It improves short-term cash flow but reduces the total amount ultimately collected.

A hybrid invoice format used in France and Germany that embeds structured XML data inside a human-readable PDF, so the same file works for both people and automated systems.

Legislation protecting independent contractors' right to a written contract, timely payment, and freedom from retaliation. First enacted in New York City, similar Freelance Worker Protection Acts now exist in New York State, California, and Illinois, typically with a 30-day payment default and double-damages remedies.

A short window after the due date during which a late fee or interest is not yet charged. Stating a grace period on an invoice sets clear expectations before penalties begin.

The total invoice amount including tax (such as VAT or GST), as opposed to the net amount which excludes tax.

Goods and Services Tax — a value-added consumption tax used in countries such as Australia, India, Canada, and New Zealand. Businesses usually must register once turnover passes a set threshold and then charge GST on their invoices.

Harmonized System of Nomenclature code — a standardised number classifying goods for tax purposes, required on GST invoices in India. Services use the equivalent SAC (Services Accounting Code).

A commercial document issued by a seller to a buyer that itemises goods or services provided, their prices, and the total amount due. It is a formal request for payment and a legal record of the transaction.

A unique, sequential identifier assigned to each invoice. Sequential numbering with no gaps is required by most tax authorities and helps both parties track and reference payments.

Invoice Reference Number — a unique code returned by India's Invoice Registration Portal when a B2B invoice is registered under the GST e-invoicing system. Without a valid IRN, the invoice is not compliant.

Interest charged on an overdue invoice, either at a contractual rate or a statutory rate. In the UK and EU, statutory interest applies automatically to qualifying business-to-business debts.

A single row on an invoice describing one product or service, usually with a description, quantity, unit price, and line total. The sum of all line items forms the invoice subtotal.

A UK government initiative requiring businesses and self-employed individuals to keep digital records and submit tax information using compatible software. Making Tax Digital for Income Tax is being introduced in phases by income threshold.

Invoicing a client in stages tied to defined project milestones rather than all at once. It is common on large projects and helps smooth cash flow for both parties.

A payment term meaning the full invoice amount is due within 30 days of the invoice date. Common variations include Net 7, Net 14, and Net 60; shorter terms generally lead to faster payment.

The invoice amount before tax is added. Adding VAT or GST to the net amount produces the gross amount.

Optical Character Recognition — technology that extracts text and data from images or scanned documents. In invoicing, OCR reads a photographed or PDF invoice and turns it into structured, editable fields such as vendor, dates, and totals.

One-Stop Shop — an EU VAT scheme that lets businesses selling to consumers across the EU report and pay VAT through a single registration in one member state, instead of registering in every country.

Pan-European Public Procurement On-Line — an international network and set of standards for exchanging electronic documents such as invoices. Peppol BIS Billing is widely used for e-invoicing across Europe and beyond.

A preliminary invoice sent before goods or services are delivered, showing the expected cost. It is not a demand for payment or a valid tax invoice, but helps the buyer arrange funds or approvals.

An AI workflow that turns a plain-language prompt — typed or spoken — into a structured, ready-to-send invoice. The user describes the work in natural language and the system drafts the line items, amounts, and details.

A document issued by a buyer to a seller authorising a purchase, listing the items, quantities, and agreed prices. Invoices are often matched against the corresponding purchase order before payment.

A scannable code printed on an invoice that links a customer directly to a payment page or banking app, reducing friction and helping invoices get paid faster.

A document stating the price a seller will charge for specified goods or services before work begins. Once accepted, a quotation typically becomes the basis for the final invoice.

An invoice generated automatically on a repeating schedule (weekly, monthly, or annually) for ongoing services such as subscriptions or retainers. It removes the need to create the same invoice manually each cycle.

A note sent by a customer to a supplier confirming that an invoice has been paid, often listing which invoices the payment covers. It helps the supplier reconcile incoming payments.

A fee paid in advance to secure a freelancer's or firm's availability, often billed monthly. Work is then drawn down against the retainer or invoiced separately depending on the agreement.

A VAT mechanism where the buyer, rather than the seller, accounts for the VAT on a transaction. It commonly applies to cross-border B2B services within the EU, and the invoice must state that the reverse charge applies.

An arrangement where the customer, not the supplier, prepares the invoice on the supplier's behalf under a prior agreement. Self-billed invoices must be clearly marked as such.

A summary document listing all invoices, payments, and the outstanding balance for a customer over a period. It is used to remind clients of what they owe across multiple invoices.

Interest on late commercial payments set by law rather than by contract. In the UK it is 8% plus the Bank of England base rate; in the EU it is the ECB reference rate plus at least 8 percentage points.

An invoice that meets the legal requirements to claim or account for VAT/GST, including specific fields such as tax registration numbers and the tax amount. Some jurisdictions require it to be labelled 'Tax Invoice'.

The date on which a transaction is treated as taking place for VAT purposes, which determines the VAT period it falls into. It may differ from the invoice date.

Universal Business Language — an open XML standard for business documents including invoices. UBL 2.1 underpins Peppol BIS Billing and several national e-invoicing formats.

The share of a freelancer's or agency's available working hours that are actually billable to clients. A common target is around 75%, though many freelancers bill considerably less.

Value-Added Tax — a consumption tax charged on goods and services at each stage of the supply chain, used across the EU, UK, and many other countries. VAT-registered businesses must show it on their invoices.

A unique number assigned to a VAT-registered business, required on VAT invoices. For cross-border EU trade, both the supplier's and, in some cases, the customer's VAT numbers must appear.

VAT in the Digital Age — an EU reform package modernising VAT rules, including a move toward mandatory structured e-invoicing and digital reporting for cross-border transactions.

Tax deducted at source by the payer before paying a supplier or contractor, then remitted to the tax authority. Freelancers working across borders may see part of their invoice withheld under local rules or tax treaties.

The cash a business has available to fund day-to-day operations, calculated as current assets minus current liabilities. Late-paid invoices tie up working capital and can create cash-flow strain.

The standard XML-based electronic invoice format used for invoicing German public authorities. It is a national implementation of the EN 16931 European standard.

The Zakat, Tax and Customs Authority of Saudi Arabia, which runs the country's mandatory e-invoicing (Fatoora) system requiring structured invoices with cryptographic signing and QR codes.

A German hybrid e-invoice format that embeds structured XML inside a PDF/A file, allowing the same document to be read by people and processed automatically. It is closely aligned with Factur-X.