The supporting paperwork that validates the transactions noted in a business’s financial ledgers is referred to as “documentation” in the accounting context.
Important types of this kind of documentation are usually invoices, contracts, and receipts; these provide as concrete evidence that the transactions actually happened and are fairly valued.
What are the requirements for documentation in accounting?
In the context of accounting best practices, documentation must satisfy specific requirements in order to be considered acceptable. The following is a summary of what accounting standards demand for trustworthy record-keeping:
- Identification information for the purchaser, including name, address and identification number.
- Details of the seller or service provider, including name and identification number.
- When applicable, the notation ‘VAT registered’ should accompany the seller’s details.
- A unique invoice number.
- The date the invoice was issued.
- A clear description of the goods or services provided, along with quantities.
- The price charged for the goods or services.
- The place and date of delivery for the goods or services.
- The payment due date.
This information pertains to what is known as primary documentation, directly linked to individual transactions in the accounts. In addition to this, secondary documentation, like supplier contracts, customer agreements, and corporate records, also forms part of a robust accounting record system.
Validity of digital invoices
Creating an invoice through an accredited invoicing software platform ensures the production of valid documentation. Such systems automatically assign a sequential number to each invoice and include requisite company information.