Numerous documents are pivotal in facilitating smooth operations, accurate record-keeping, and financial transparency in a business. Two documents with distinct purposes and significance are the “Invoice” and the “Delivery Challan” generated with billing software. While both documents are associated with the movement of goods and services, they serve different functions within the business ecosystem. This article includes critical disparities between these documents, shedding light on their roles, contents, and implications, showcasing how each contributes to the smooth functioning of business operations.
Table of Contents
What is an Invoice?
An invoice is a document that outlines the details of goods or services provided by a seller to a buyer. It typically includes item descriptions, quantities, prices, payment terms, and the total amount due. In business transactions, invoices serve as a formal request for payment and help track financial transactions between parties.
What is a Delivery Challan?
A delivery challan is a document used for transporting goods to acknowledge the delivery of goods from one party to another. It typically includes information about the sender, recipient, description of the goods, quantity, and other relevant details. Unlike an invoice, a delivery challan does not include payment information. It records the goods being transported and is often used for internal tracking, inventory management, and compliance.
What are the Differences between an Invoice and a Delivery Challan?
- Purpose: Invoices are formal requests for payment from the seller to the buyer. In contrast, the delivery challan is a document acknowledging the physical delivery of goods from one party to another.
- Financial Aspect: An invoice includes payment information and serves as a demand for payment from the buyer to the seller. In contrast, a delivery challan does not retain payment information and is unrelated to payment. It focuses on confirming the delivery of goods.
- Legal and Compliance: Invoices are often required for accounting, tax, and legal purposes. All GST-registered businesses must generate GST invoices for every sale made. It is essential for recording sales transactions and revenue, whereas delivery challans are used for internal tracking, inventory management, and compliance purposes. It may be required to prove the movement of goods during transportation.
- Sequence: Invoices are issued after the delivery of goods or completion of services to request payment. In contrast, delivery challans are issued to confirm the physical delivery of goods and to initiate the movement of items.
- Acknowledgement– The receiver or customer must acknowledge the delivery challan issued, whereas invoiced need not be acknowledged by the receiver or customer.
- Content– Delivery challan includes information about the sender, recipient, description of the goods, quantity, and other crucial details. On the other hand, an invoice contains details of goods or services provided by a seller to a buyer. It typically includes item descriptions, quantities, prices, payment terms, and the total amount due.
Conclusion
The Invoice and the Delivery Challan are interrelated documents, each serving a unique purpose in buying and selling goods or services. While the Invoice focuses on the financial aspects and formalises the payment request, the Delivery Challan concentrates on confirming the physical movement of goods. Both documents contribute to business operations’ efficiency, transparency, and compliance, ultimately facilitating the smooth flow of business transactions.
FAQs-
Are invoice and delivery challan compulsory under GST?
Under Section 31 of the CGST Act of 2017, every individual registered for supplying or transporting taxable goods must furnish an invoice containing the applicable amount and other pertinent details. Similarly, issuing a delivery challan is obligatory when dispatching and transporting products.
What is the role of a delivery challan?
A Delivery Challan is an official record crafted when goods are moved between locations, with or without a sales transaction. For instance, it comes into play when transferring items from a central office to its various branches. These documents are dispatched alongside the shipment of goods.
Can an invoice be generated before delivery?
An invoice is typically generated once the vendor or supplier fulfils a customer’s order, which may involve products, services, or a combination. In the case of businesses providing products, it is customary to create an invoice shortly after delivery.
How many copies of the delivery challan are required?
When prepared, three copies of the delivery challan must be issued- the original copy, duplicate for the transporter and triplicate for the consignor.
What are the details mentioned in a delivery challan?
The delivery challan should contain the name, address and GSTIN of the sender and receiver both. Description of good, quantity and other required details.
