A consolidated invoice summarizes transaction information and multiple invoices issued within a specified period. Multiple invoices can be issued collectively as a single invoice when several transactions are made in quick succession with the same client. Therefore, using consolidated invoices can improve accounting efficiency.

Japan introduced the Invoice System on October 1, 2023. Consolidated invoices must comply with the Invoice System. Consequently, tools and systems that create consolidated invoices in compliance with the Invoice System are becoming more common in Japanese businesses.

This article provides basic information on consolidated invoice formats, preparation steps, benefits, and precautions. We also outline how to comply with Japan’s Invoice System.

What’s in this article?

• What is a consolidated invoice?
  
• The benefits of consolidated invoices
  
• Key points about consolidated invoices
  
• Consolidated invoice formats
  
• How to prepare a consolidated invoice
  
• Creating compliant consolidated invoices under the Invoice System
  
• Establishing an Invoice System–compliant environment
  
• How Stripe Invoicing can help
  

What is a consolidated invoice?

A consolidated invoice contains collective information on multiple transaction invoices and deposit slips for a specific period. For example, with a monthly invoicing period, all invoices for transactions that occurred during the month are aggregated so the invoice can be submitted for a lump sum.

A consolidated invoice is commonly generated using spreadsheet software or a billing system. In this process, the detailed information listed on each delivery note or invoice is imported into the consolidated invoice, which is then issued to the client.

Differences from regular invoices

Both consolidated invoices and regular invoices are issued to business partners to request payment for amounts incurred during transactions. They also both clearly state the invoice amount. However, regular invoices are issued individually for each transaction. On the other hand, a consolidated invoice, as the name implies, combines the amounts incurred from multiple transactions within a specific period and requests payment for the total.

Although the invoice can be prepared in any format, it is important that the entry items are clear and easy to understand so the client can see exactly what is being billed. For this reason, it is important to understand invoice requirements and their purposes ahead of time.

The benefits of consolidated invoices

Consolidated invoices are commonly used in B2B transactions as an effective way to improve work efficiency. Below, we describe the benefits of consolidated invoices for the issuer and the recipient:

Benefits for issuers

When there are frequent transactions, issuing an invoice for each of those transactions results in a large number of issued invoices. This can make it difficult to know the total invoiced amount. However, if a consolidated invoice is used instead, the total invoiced amount can be easily checked. Consolidated invoices can also reduce the workload of generating invoices and checking payouts, and they can prevent missing invoices and double billing.

Benefits for recipients

Even when invoices have been issued by the same company, they can be issued by different departments—such as sales and accounting—depending on the transaction. Receiving multiple invoices from different departments can make it complicated for the invoice recipient to know what amount to pay. This could lead to missed or delayed payments or concerns over being double-billed by the issuer.

Consolidated invoices are used to avoid such issues. Consolidated invoices summarize information on multiple transactions in a single document and state the total invoiced amount. This allows the client to verify the total invoiced amount instantly and proceed with the payment process.

Key points about consolidated invoices

Consolidated invoices—which allow businesses to bill multiple transactions together—offer significant benefits in terms of simplifying accounting operations. However, one important consideration regarding consolidated invoices is that they must comply with the Invoice System.

By nature, consolidated invoices alone cannot meet the requirements of the Invoice System because they lack relevant details. For example, both consolidated invoices and qualified invoices issued under the Invoice System share common elements. They must include the issuing company’s name, customer’s name, and the total amount billed. However, consolidation invoices typically omit details, such as the date of each transaction, specific transaction details, amount per consumption tax rate, and the consumption tax amount. For this reason, a consolidation invoice alone is generally considered insufficient to fully comply with the Invoice System.

Therefore, businesses are required to take additional measures, such as attaching separate documents to the consolidation invoice. We discuss methods for complying with the Invoice System below.

Consolidated invoice formats

Consolidated invoices are usually classified into one of the following two types:

Tax-inclusive display format

A tax-inclusive display format is a relatively general and simple consolidated invoice that includes only the minimum required information. This information includes the total invoiced amount for multiple transactions. The tax-inclusive display format does not contain details of each transaction—such as product names and unit prices—but does include general transaction information, invoiced amounts, and payment deadlines.

Since individual transaction details and invoiced amounts are not included in the tax-inclusive display format, it can reduce the workload of preparing the document. However, it can also make it difficult to verify the details and invoiced amounts for each transaction.

Itemized display format

Unlike the tax-inclusive display format, the itemized display format contains detailed information on each transaction. In other words, it is generated as an invoice statement.

In the itemized display format, details of each transaction—such as product or service name, unit price, and quantity—are included in addition to the total invoiced amounts and payment deadlines.

With this format, information on individual transactions—including applicable tax rate, amount of consumption tax, and the invoiced amount—can be verified. This allows the recipient to certify the accuracy and integrity of the invoiced amount based on the consolidated invoice alone.

The biggest advantage of using the itemized display format to create a consolidated invoice is that the format complies with the various requirements of the Invoice System. As long as the required information for a qualified invoice is included in the details of individual transactions, even a consolidated invoice can be used as a qualified invoice.

How to prepare a consolidated invoice

The basic steps of preparing a consolidated invoice are as follows:

• Collect invoice information: First, all information regarding the transactions within a specified period must be collected. To ensure there is no missed billing, it is important to be thorough and make sure all bills have been gathered in this step. When collecting such information, it is convenient to have a list of reference numbers assigned to each transaction date, item, and client before starting the collection process.
  
• Extract invoice information: Extract the transaction-related information to be included in the consolidated invoice. Place it into the list described above or another sheet.
  
• Convert to the consolidated invoice format: Convert the extracted information to a consolidated invoice format—such as the tax-inclusive or itemized display format—or use an automated tool. During this step, ensure the information is complete and accurate. Since the text recognition accuracy of automated tools varies, it can be faster and more accurate to handle this step manually if the information to be entered is not extensive.
  
• Send the consolidated invoice: Send the prepared consolidated invoice to the client. This can be done by mailing a hard copy, attaching a portable document format (PDF) to an email, or uploading it to a website where the client can download it. Consider what will be convenient for your company and your client. Then, issue the consolidated invoice once the client approves the method of delivery.
  

Creating compliant consolidated invoices under the Invoice System

With the introduction of the Invoice System on October 1, 2023, business owners are required to issue and retain qualified invoices that meet the requirements. This helps ensure that the input tax credit can be applied properly and securely. The current consumption tax in Japan is divided into a standard tax rate of 10% and a reduced tax rate of 8%. The Invoice System was introduced as an input tax credit method to deal with these different consumption tax rates.

For this reason—similar to cases in which an invoice is issued on a per-transaction basis—whether a consolidated invoice can serve as a qualified invoice is a key factor in applying input tax credit. With such a system in place, the seller must issue documents with careful planning and full consideration for the buyer.

Below, we describe specific ways to handle consolidated invoices under the current Invoice System:

Attach an invoice statement or a delivery slip to a consolidated invoice

One way to ensure compliance is to use multiple documents in conjunction with a consolidated invoice.

Required information for a qualified invoice does not have to be covered in a single document. For this reason, it is acceptable to use multiple documents to collectively meet the requirements of the Invoice System.

If a consolidated invoice alone does not meet the requirements, attach an invoice statement or a delivery slip for each of the transactions that occurred during the period. In these documents, it is important that the required items of a qualified invoice—such as transaction date, product name, consumption tax amount, and tax rate—are clearly stated.

For example, you can enter the Invoice System registration number—which proves that you are a qualified invoice issuing business owner—on the consolidated invoice. In addition, you can include any details about each transaction—which the consolidation invoice cannot fully cover—on the invoice statement or a delivery slip. These documents can collectively comply with the Invoice System.

However, when using multiple documents, the connections between each document must be clear. For this reason, include the relevant invoice statement number and the delivery slip number on the consolidated invoice. Manage these numbers by linking them together so they can be presented promptly, if necessary.

Use a consolidated invoice as a qualified invoice

Another way to ensure compliance is to use a consolidated invoice as a qualified invoice. To do so, it is necessary to introduce a billing system that complies with the Invoice System.

For example, if you have been using the itemized display format since before the Invoice System was introduced, you only have to make minor format modifications. This is because all of the transaction details are already included. Therefore, it is easier for this format to comply with the Invoice System than the tax-inclusive display format. On the other hand, the tax-inclusive display format requires a major system update, which is why advanced planning can help ensure a manageable workload.

It is also possible to use a consolidated invoice as a supplementary document and separately introduce a tool for creating qualified invoices.

Use another document as a qualified invoice with a supplementary consolidated invoice

Another way to ensure compliance with the Invoice System is to use a different document as a qualified invoice.

A qualified invoice does not necessarily have to be issued as an invoice. As long as the document meets the Invoice System’s requirements for a qualified invoice, even a delivery slip or an invoice statement alone can be compliant.

In this case, a consolidated invoice is unnecessary, but it is still advisable to attach it as a supplementary document. It can help improve convenience between businesses.

Establishing an Invoice System–compliant environment

In this article, we have covered information on consolidated invoice formats, preparation steps, benefits, compliance, and precautions.

For buyers to receive the input tax credit under the current Invoice System without any problems, appropriate action by both the issuer and recipient is required. Under the Invoice System, qualified invoices must be issued from the seller to the buyer and stored by both parties for a certain period. For this reason, business owners who deal with consolidated invoices should have systems in place that allow them to comply with the Invoice System.

We recommend online tools that can simplify work—such as automatic consumption tax calculation functions and accounting software—as they are extremely useful for creating invoices.

The Invoice System has various requirements regarding input tax credit, and it is necessary to make preparations in advance, such as by implementing systems that are compatible with qualified invoices and registering for the Invoice System. However, once these preparations are complete, accounting operations related to qualified invoices should be more efficient in the future.

How Stripe Invoicing can help

Stripe Invoicing simplifies your accounts receivable (AR) process—from invoice creation to payment collection. Whether you’re managing one-time or recurring billing, Stripe helps businesses get paid faster and streamline operations:

• Automate accounts receivable: Easily create, customize, and send professional invoices—no coding required. Stripe automatically tracks invoice status, sends payment reminders, and processes refunds, helping you stay on top of your cash flow.
  
• Accelerate cash flow: Reduce days sales outstanding (DSO) and get paid faster with integrated global payments, automatic reminders, and AI-powered dunning tools that help you recover more revenue.
  
• Enhance the customer experience: Deliver a modern payment experience with support for 25+ languages, 135+ currencies, and 100+ payment methods. Invoices are easy to access and pay through a self-serve customer portal.
  
• Reduce back-office workload: Generate invoices in minutes and reduce time spent on collections through automatic reminders and a Stripe-hosted invoice payment page.
  
• Integrate with your existing systems: Stripe Invoicing integrates with popular accounting and enterprise resource planning (ERP) software, helping you keep systems in sync and reduce manual data entry.
  

Learn more about how Stripe can simplify your accounts receivable process, or get started today.