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What is an adjusted invoice?

02.10.2023
What is an adjusted invoice?

The business world is rarely perfect. Mistakes happen, whether human error, technical failure or simple negligence. Invoices are no exception. An incorrect item number, a misspelling of a price or a missing part can have serious consequences. But what if the error is discovered after the invoice has been sent? That’s where the “corrective invoice” comes in – a tool that is as important as it is complex. In this comprehensive guide, you will learn how to handle a corrective invoice in a professional manner, from identifying an error in the original invoice to creating and submitting a corrected version.

Error in the original invoice: what options do you have?

Before starting to process a rectification invoice, it is worth identifying the nature of the errors in the original invoice. Errors can range from an incorrect product description, incorrect pricing or incomplete information. In many cases, a corrective invoice is unavoidable in order to resolve the problem legally.

The corrective invoice: what should it contain?

The corrective invoice must contain the same minimum legal information as the original invoice. This includes information such as the invoice number, the date, the time of delivery or performance, full contact details of the party issuing the invoice and the invoice recipient, and the tax or VAT identification number. Changes should be clearly visible, so it is advisable to keep both the original and the corrected version of the invoice.

When can I submit a corrective invoice?

When should a corrective invoice be issued?

A cancellation or rectification invoice must be issued when:

  • important information required by the Value Added Tax Act (VAT Act) to be included on the invoice is missing or incorrect (e.g. the name of the invoice recipient).
  • the incorrect VAT rate is used (e.g. 7% instead of the correct 19%).
  • There are arithmetical or numerical errors.
  • The information on the service provided or the volume of the service or product is incorrect.
  • there are discrepancies in the invoice or delivery dates.

However, it should be noted that it is not obligatory to correct the invoice if there are only technical errors which do not affect the overall legibility of the invoice. Although such errors are annoying, they are not sufficient grounds for cancelling or correcting an invoice, provided that all legal requirements are met.

Invoice correction cover letter: How do I report changes?

It is important not only to prepare a covering letter for the correction of an invoice, but also to communicate it properly. A professional cover letter for an invoice adjustment should inform the recipient of the changes and the reasons for them. The cover letter should be worded in a polite manner and should stress the urgency of the situation without causing the business partner anxiety.

Attaching a corrective invoice: how to send it?

A corrective invoice can be sent in the same way as the original invoice. Whether by post, email or via a dedicated invoice portal, it is important that the invoice reaches the recipient safely. The cover letter should clearly state that it is a revised version.

You will receive the revised invoice as an attachment: What should the recipient do?

When the recipient receives the revised invoice, he/she should check the changes carefully to make sure that the revised invoice meets all the requirements. In addition, the corrected version should be kept in a safe place, preferably together with the original invoice and a covering letter.

Preparation of the adjustment invoice: best practice

When preparing a rectification invoice, make sure that it is complete and error-free. The wording used should be precise and easy to understand. It is also advisable to include some sort of ‘change list’ detailing all changes compared to the original invoice. This will make it easier for both parties to keep track of changes.

Tax consequences of the adjustment invoice

A corrective invoice also has tax consequences. Incorrect invoices may result in input tax deductions not being recognised. It is therefore crucial to correct incorrect invoices in a timely manner to avoid possible negative financial consequences.

How is a corrective invoice issued?

The preparation of a corrective invoice is an art, as various factors have to be taken into account to ensure that it meets both legal and commercial requirements. Based on expert opinions from websites such as sevdesk.de, lexware.de, sage.com and haufe.de, here are the steps that will help you to prepare an effective and legally compliant adjustment invoice.

  • Marking the correction: it must be clearly visible that this is a correction invoice. This can be done either in the header or by a special note directly below the invoice number.
  • Details: As on the original invoice, all the necessary information must be provided: invoice number, date, addresses of business partners and a detailed list of services or goods.
  • Reference to the original invoice: It is advisable to provide a reference to the original invoice, for example by giving the old invoice number or the date of the original invoice.
  • List of changes: To ensure traceability, all changes should be listed in detail. Whether it is the price, quantity or any other element of the invoice, changes should be clear and concise.
  • Clarity and structure: Ensure that the revised invoice is as clear and well-structured as the original version. Unclear corrections can lead to further confusion.
  • Legal and tax information: Check that tax information, such as VAT, has been corrected correctly. Also make sure that the corrected invoice complies with legal requirements.
  • Quality control: Check the corrected invoice carefully before sending it out. To minimise errors, you can ask for a second person to check it.
  • Documentation: Keep both the original and the corrected invoice. In some cases, it is also advisable to archive the entire history of communication with the customer.

By following these steps, you will increase the likelihood that the corrected invoice will not only comply with legal requirements, but will also not affect the business relationship.

Invoice template for a corrective invoice: a useful tool

In day-to-day work, a correction invoice template can save a lot of time and at the same time reduce the likelihood of mistakes. Many accounting software providers offer specific correction invoice templates. These are designed to meet all legal requirements and can usually be easily adapted to the specific needs of the company. The advantage of such a template is not only the uniformity of the documents, but also the possibility of avoiding repetitive errors. This is because a well-designed template already contains all the necessary fields and data, from the invoice number to tax information. Of course, regardless of the template used, a quality check should always be carried out to ensure that all specific changes and additions have been made correctly.

Important deadlines and expiry dates

The deadlines for correcting legal invoices should not be forgotten. In Germany, for example, invoices must be kept for six years. When correcting VAT amounts or other tax-related items, there are specific time limits that must be respected.

This way you can ensure that the business process of invoicing and correcting invoices runs smoothly and meets both legal and tax requirements. If you have any further questions, we recommend that you consult a tax consultant or lawyer.

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