Invoice
The claim: a number, a date, a counterparty, line items, a tax breakup, a total, terms, and a due date. An issued invoice is treated as immutable — a correction attaches a credit or debit note rather than editing the document, because the original taxable event has to stay on the record.
Why it matters in practice. The invoice is the thing a customer disputes, an accountant posts, and a tax authority may inspect. Once it is editable, none of those three are defensible, and the edit itself becomes the finding.
Often confused with Tax invoice, Payment, Proforma invoice.
Tax invoice
The invoice that satisfies GST law: a document carrying the particulars the CGST Act and the CGST Rules require for a taxable supply. Section 31 of the CGST Act is the base provision for issuing tax invoices; the particulars themselves are set out in the rules.
Why it matters in practice. A customer who wants to claim input tax credit needs a document that will stand up later. A receipt that looks like a tax invoice but is missing required particulars creates a problem on their side that comes back to you at renewal.
Often confused with Invoice, Tax invoice particulars, Proforma invoice.
Invoice numbering
The control by which each invoice receives a unique, normally consecutive number, so that no two documents share an identity and no number disappears without explanation. Gaps should be accounted for by a recorded event rather than by silence.
Why it matters in practice. Numbering is a control, not a cosmetic setting. A number missing at month end is an unanswerable question for your accountant; a duplicate number is a worse one, because two documents now claim the same identity.
Often confused with Credit note, Reversal (storno), Refund.
Payment
The money event: an amount, a method, when it was received, the account or counterparty it came from, and any external reference the counter has. A payment is a record in its own right, and it can exist before anyone knows which invoice it settles.
Why it matters in practice. Keeping the payment separate from the invoice is what makes a settlement in parts auditable: you can say when money arrived, by which route, and how much of it was applied to each claim.
Often confused with Invoice, Allocation, Partial payment.
Partial payment
A payment smaller than the outstanding balance on an invoice. It needs no special feature: it is a payment record plus an allocation of part of it, and the invoice's state is recomputed from the allocations rather than toggled to paid.
Why it matters in practice. Part advance, part transfer and part cash, and settling an invoice across several days are ordinary Indian cases, not exceptions. Modelling them is what stops the business insisting a bill is unpaid while the receipt is sitting in the drawer.
Often confused with Allocation, Overpayment and credit balance, Payment promise.
Allocation
The link record that applies part of a payment to part of an invoice. One payment can settle several invoices and one invoice can be settled by several payments, so outstanding is the invoice total minus the sum of the allocations against it.
Why it matters in practice. Because outstanding is derived rather than maintained, it cannot drift out of step with the payments that produced it. When a customer disputes, you are reading a list of receipts rather than arguing about a status field somebody can edit.
Often confused with Payment, Partial payment, Overpayment and credit balance.
Overpayment and credit balance
Money received that the customer is not owed — a payment with no allocation, or one allocated beyond the invoice balance. The excess becomes a credit balance belonging to the customer, either refundable or carried forward to a later invoice.
Why it matters in practice. An untracked overpayment is a quiet way to hand money back months later without noticing. A credit balance needs its own age and its own owner, exactly as an invoice does, or it becomes the item everybody forgot about.
Often confused with Credit note, Refund, Allocation.
Credit note
A new document that reduces the value of an earlier invoice, referencing the original rather than editing it. Its mirror image is the debit note, which increases the value claimed. Cancelling an invoice is a third, separate thing: a status change with a reason, not a new document.
Why it matters in practice. Correcting an issued tax invoice is a regulatory event with its own document, not a database update. An edit leaves behind a number nobody can defend; a credit note leaves behind a trail.
Often confused with Reversal (storno), Refund, Overpayment and credit balance.
Refund
Money returned to a customer. In a system that keeps records separate, a refund is a new payment record with a reversing allocation, so the invoice returns to partly or wholly outstanding and the original receipt stays visible.
Why it matters in practice. A refund reduces what you hold and increases what the customer owes; reducing the invoice is a different act. Getting that distinction right is what lets a day-end cash count still reconcile after a return.
Often confused with Credit note, Reversal (storno), Overpayment and credit balance.
Reversal (storno)
The practice of cancelling a booked entry with an equal and opposite entry instead of deleting it, so the original stays on the record and the correction is visible as its own event with an actor and a reason. "Storno" is the European bookkeeping term for the same idea and is used informally in Indian back offices.
Why it matters in practice. An unrecorded correction is functionally identical to no control at all. Reversals are what let you answer "what happened here" months later without reconstructing it from whoever still works there.
Often confused with Credit note, Refund, Invoice numbering.
Payment promise
A dated commitment recorded against an unpaid invoice: that the customer has said when they will pay. It is not money, and it does not reduce the outstanding balance.
Why it matters in practice. Collection becomes a list with owners and dates instead of a memory exercise conducted by whoever is most uncomfortable asking. A promise that has passed its date is also a signal you can act on rather than a broken promise to ignore.
Often confused with Partial payment, Receivables, Allocation.
Ledger attachment
The handoff of billing data to the accounting system that holds the books — the export your accountant imports, and the mapping that says which column becomes which ledger line. The operational record owns the documents; the ledger owns the interpretation of them.
Why it matters in practice. The billed and collected states have to survive the handoff intact. A flattened "paid" flag crossing into the accounts is exactly how partial settlements quietly stop being visible in the books after go-live.
Often confused with Cost accounting, Payment, Receivables.