A materials invoice is used for billing consumer and commercial customers solely for parts, construction components, or raw goods that were or will be used for manufacturing, repair, or other industrial/business purposes. An invoice for materials can be issued on its own or attached to a labor invoice.
Labor and Materials Invoice – An all-in-one invoice used for charging customers both the hours spent on a job as well as the materials that were allocated for completing it.
What are Raw Materials?
Raw materials are the essential building blocks for production goods. They are found in nature and are mainly classified into three (3) categories, which are animal, vegetal, and mineral. Examples of raw material from each category are given below.
Animal: Leather, oils, shell, dentin, feathers, and silk.
Vegetal: Wood, linen, grain, and cork.
Mineral: Titanium, stainless steel, granite, and quartz.
When describing material types, the term “materials” as a whole can be used to classify a wide range of man-made materials in addition to the basic forms listed above, including, parts, gears, paint, paper, concrete, textiles, and plastic.
Types of Materials
In accounting terms, companies classify materials as either indirect or direct materials, based upon where/how they are used in the manufacturing process.
Indirect materials – A business will classify a material as indirect if it is not included in the final product. The amount of indirect material used cannot typically be traced to an individual product, as indirect materials can include lightbulbs, gloves, oils, and glue.
Direct materials – Materials that are considered direct can be traced to the final product. Examples include a spring used to make a toy, cement in a building, or chocolate chips baked into a cookie.