Since the Ease of Paying Taxes Act, a Philippine business issues a sales invoice for both goods and services, and the invoice must show your registered name, TIN with branch code, address, buyer details where required and VAT treatment. Invoices in USD or EUR still need a PHP conversion for BIR reporting.
Republic Act 11976, the Ease of Paying Taxes Act, made the sales invoice the primary document for sales of goods and services alike. Previously, a service provider issued an official receipt when it was paid. Now the invoice is issued when the sale is made, and VAT on services is recognised at that moment rather than at collection.
For a consulting firm this means that an invoice dated 28 March carries output VAT in the first quarter, even if the client pays in May. Cash-flow planning must therefore account for VAT due before the customer has paid.
The regulations prescribe the elements of an invoice. At minimum, expect to show your registered business name, TIN with the branch code, registered address, a running invoice number, the date, a description of what was sold, quantity and unit price, the VAT amount or a statement that the sale is zero-rated or exempt, and the buyer's name, address and TIN where the regulations call for it.
Customers who are VAT-registered will not be able to claim input VAT on an invoice that omits these details. Design the template once, lock the mandatory fields and make the numbering sequence difficult to alter.
Many Philippine exporters of services bill in USD or EUR, yet they report to the BIR and keep books in pesos. A contract that says USD 8,000 per month needs a peso value on each invoice or each booking, using a rate and date that your accountant defines in the accounting policy. Applying the policy consistently matters more than finding the perfect rate.
Write the rate, the source and the date on the invoice file. When the customer pays, the peso received may differ from the peso booked, and that difference is recognised separately as an exchange gain or loss in the books.
Larger Philippine customers act as withholding agents. When they pay your invoice they deduct creditable withholding tax, pay it to the BIR on your behalf and send you a Form 2307. Your receivable is therefore the invoice amount less the withholding, and the certificate is worth money at income tax time.
Build a register of 2307 certificates by customer and quarter. A missing certificate is a lost credit, and chasing it six months later is much harder than asking when the payment arrives.
Never edit an issued invoice. If the price changes, a quantity was wrong or the customer returns the goods, issue a credit note that cites the invoice number and, if needed, issue a fresh invoice. Keep all three documents together so that a reviewer can follow the story without asking you.
4invoices.net produces PDF invoices and keeps an invoice archive, which makes it easy to retrieve the exact document sent to a customer. It does not transmit invoices to the BIR, convert currencies at official rates or generate official receipts on payment, so the VAT treatment, the rate used and the BIR requirements remain your accountant's call.
A software developer in Cebu bills a US client USD 6,000 for a month of work. The invoice states the amount in dollars and, where the accounting policy requires, the peso equivalent at the agreed rate. If the policy rate is PHP 56 per dollar, the booked sale is PHP 336,000. When the client pays, the bank credits PHP 334,500 after the actual conversion, so PHP 1,500 goes to the books as a foreign exchange loss.
A domestic customer billed PHP 200,000 plus VAT receives an invoice for PHP 224,000: PHP 200,000 sale and PHP 24,000 output VAT. If that customer withholds 2 percent, the cash received is PHP 220,000 and the Form 2307 covers the PHP 4,000 withheld.
Invoices must be numbered in an unbroken sequence, and each branch with its own branch code issues from its own series. A gap in numbering is a red flag, so cancelled invoices must stay in the series and be recorded as cancelled, not removed.
If you still hold pre-printed booklets, ask the Revenue District Office how long they may be used and how unused stock should be disposed of. Do not mix booklets and system-generated invoices in the same series without checking the rules.
A good customer file carries the correct legal name, TIN, billing address, contact person, agreed payment terms and whether the customer is a withholding agent. Updating it before the first invoice avoids rejected deductions and confusion about who must pay.
Where the customer is a government agency or a large company with its own vendor portal, ask for its invoice instructions at the start. Some insist on specific wording or attachments that you would otherwise learn about after a payment delay.
A written invoice is your starting point for collection. Late payers respond best to a reminder that quotes the invoice number, amount and due date. Interest on late payment depends on what the contract says, and absent a stipulation the legal interest rate set by the Bangko Sentral applies in appropriate cases.
4notify.net lets you send an SMS or e-mail that you write yourself, which is enough for a polite reminder. The product does not run an automatic dunning cycle, so decide who sends reminders and when.
The company bills local clients in PHP and foreign BPO clients in USD, but the accounting system handles only one currency — requiring a manual conversion and separate reconciliation every month.
Ask your accountant which BIR document applies (sales invoice or official receipt) and convert USD or EUR amounts to PHP at the rate BIR accepts, in your own records. 4invoices does not convert at BSP rates or transmit invoices to EIS.
Generating official receipts manually after each payment and matching them back to the corresponding EIS invoice consumes hours of finance-team time each week.
Send a receipt or thank-you by SMS or e-mail from 4notify, written by you. Official receipts are not generated automatically on payment, and BIR-registered receipts are issued as BIR requires.
Different salespeople issue invoices in different formats, so the TIN, branch code or VAT statement is sometimes missing.
Fix one invoice template with the mandatory fields, restrict who may change it and review a sample of issued invoices each month against the BIR requirements.
Under the Ease of Paying Taxes Act the sales invoice is the principal document for sales of both goods and services, and official receipts are not the main proof of a service sale. Practical details, including the transition period and what you may do with old booklets, come from BIR regulations, so check the current guidance with your Revenue District Office.
Core details include the seller's registered name, TIN and branch code, business address, invoice number and date, a description of the goods or services, quantities, prices, the VAT amount or the statement of the tax treatment, and the buyer's name, address and TIN where required. Because the regulations specify the content, your accountant should validate your template against the current BIR rules.
You can quote and bill in USD or EUR, but you must determine the peso equivalent for BIR reporting and bookkeeping. Which exchange rate you apply, and on which date, should follow the rules your accountant confirms. Keep a note of the rate and its source on every invoice file, so the conversion is repeatable when the BIR asks how you arrived at the peso amount.
When a customer who is a withholding agent pays you, it may deduct creditable withholding tax and give you a Form 2307 certificate. You use the certificates as a credit against your income tax. Record the net cash received and the withholding receivable separately, and chase missing certificates, because without one you cannot claim the credit.
Do not overwrite an issued invoice. Issue a credit note or a replacement referring to the original and keep both. Cancelled invoices must stay accounted for in numerical order, and the VAT effect should flow through the right return period. Ask your accountant how the BIR rules treat cancellations in your category before you delete anything.
PDF invoices and an invoice archive. Official receipts and BIR reporting follow BIR rules.
