Tax Invoice & Billing Process
Tax Invoice & Billing Process
What is a tax invoice?
- The VAT document for business-to-business transactions
- The issue date follows the supply date
- Secure the billing contact and acceptance criteria when you sign the contract
The moment you fix the tax invoice issue date, your revenue recognition and the client’s payment schedule are both locked in. Once you get the contract signed and step away, the deal moves onto a separate clock that runs from the invoice date, not the contract date. That is why first-half won deals show up in the sales report but are missing from the second-half cash plan. Billing isn’t something accounting starts; it’s something sales finishes.
An electronic tax invoice is, in principle, issued at the time of supply and must be transmitted no later than the 10th of the month following the month of supply. A monthly consolidated tax invoice, which bundles a month’s transactions, is dated the last day of that month and must meet the same deadline. Miss it, and late-issuance or non-issuance penalties apply based on the supply amount. The client may also hold off on intake because its input VAT deduction schedule is thrown off. If the training service is VAT-exempt, you must issue an invoice instead of a tax invoice. Corporate commissioned training is often taxable, so confirm its tax status at the quote stage.
Many Korean clients run on their own cutoff schedules, such as 'invoices received by the 10th are paid at the end of the following month.' If a company’s cutoff is the 10th and you issue on the 11th, payment slips by a full month. For contracts split into advance, interim, and final payments, or billed on a progress basis, each installment has its own supply date, so you can only issue an invoice with an acceptance confirmation for each installment. When amounts change or a contract is terminated, you issue a revised tax invoice, and depending on the reason, it carries either the original issue date or the date the change occurred.
The most common misconception is thinking billing is done once the invoice is issued. Issuing it on Hometax and the client accepting it are separate steps. If the purchasing contact doesn’t register it in the internal system, it never appears on the payment list. If the client’s business registration number or sub-business number is wrong, you must cancel and reissue, and the deadline passes in the meantime. If you issue early without an acceptance confirmation and the client rejects it, you end up doing the work twice, including a revised tax invoice. Rules on issuance deadlines and penalty taxes may change, so check the National Tax Service guidance.
Jaehyuk ParkA hands-on instructor teaching B2B technical sales and AI-powered sales strategy
Seungtae ParkA hands-on AX instructor who teaches AI business development and marketing automation by building it himselfIt was introduced under the VAT system as documentation for verifying tax at each stage of a transaction. In Korea, the Value-Added Tax Act sets out the issuance obligation and required details. Electronic tax invoices became mandatory in the 2010s, making paper invoices the exception.
This deal involved delivering a three-month on-site leadership program to Company A, an auto parts manufacturer with 380 employees, for KRW 42 million (≈ US$31,400). Training ended in late June, yet not a single won had arrived by mid-August. On checking, the tax invoice had not even been logged in Company A’s purchasing system. (Hypothetical example)
- On August 14, Manager Park, the sales rep, called Manager Kim in Company A’s purchasing team. The answer: 'The training team’s acceptance confirmation never came through, so we couldn’t even log your invoice.'
- The tax invoice dated June 30 had only been transmitted through Hometax. Company A had an internal rule that it would register a purchase only after the acceptance confirmation and the list of trainees who completed the program were attached.
- Manager Park asked the training operations team for help and, within two days, compiled the list of 92 trainees who completed the program and the instructor’s on-site delivery confirmation. On August 18, Manager Lee of Company A’s talent development team signed off on the acceptance.
- Company A pays at the end of the following month for submissions received on the 10th, so we filed the documents to meet the September 10 cutoff and locked in the confirmation by asking Manager Kim, 'Please reply with the receipt number.'
- Afterward, we updated the standard contract to specify the acceptance confirmation form and its issue date (within 5 business days after training ends), and added a question about the client’s billing deadline to the proposal-stage checklist.
- The KRW 42 million (≈ US$31,400) was paid in full on October 31, and the average collection period on the next quarter’s three client deals fell from 74 days to 41 days.