When should a customer typically be invoiced?

Invoicing a customer typically occurs once the items are shipped because it aligns with the principle of recognizing revenue based on the delivery of goods or services. This timing reflects the completion of the transaction from the perspective of the seller, as it indicates that the obligation to deliver the product has been fulfilled.

This approach is commonly accepted under revenue recognition principles, which state that revenue should be recognized when it is earned and realizable. In most cases, this happens when the goods are in the hands of the customer. This method also facilitates accurate accounting and inventory management, as the invoicing process can be directly tied to the shipment records.

Customers receiving an invoice post-shipment are also provided with a clearer understanding of the transaction, as they have the product in hand at the time of invoicing, which can help clarify any discrepancies that may arise regarding the order. Additionally, later invoicing ensures that the financial records reflect the actual state of inventory and accounts receivable.