Invoice, Recipient Generated

A recipient-generated invoice is an invoice generated by the buyer on behalf of the seller. It is a government prerequisite in Australia and New Zealand for both parties to be registered for GST, and the parties must enter into a written agreement describing the arrangement, the terms and the categories of goods and/or services covered. For example, supposing a tyre supplier delivers 100 tyres to a car assembly plant every day. In a traditional relationship, the supplier would invoice the buyer, who would match the invoice with the purchase order and goods receipt note and pay the account. But if the parties are in a stable trading relationship, and the cars coming off the production line all have five tyres on them, the tyre supplier must have delivered the tyres, so the purchase order and invoice and subsequent reconciliation do not add value. Instead, the buyer can calculate the number of tyres received from the supplier and generate a payment at the agreed rate for each tyre, and send the recipient-generated invoice and the payment direct to the supplier. See also Muda.

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