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“The bank is not as black as it is painted – how to read financial documents”

Basic financial documents - how to read them?

Contents

Source: https://www.pexels.com/photo/woman-with-a-folder-3790830/

Documents are present in everyone’s life. When we go shopping (we get a receipt), when we use hotel services (we get an invoice), pay for a phone call (we get a bill), sign many contracts with different service providers, set up an account (fill in a form), make a transfer (fill in a sheet intended for this purpose), settle taxes (fill in a tax return), etc. These are only selected examples of basic documents. What’s on them, how do you decipher them?

Due to possible small differences in the information contained in the documents in different countries, we will focus on European documents. Here are some examples:

  • One of the most popular documents is the invoice.

This is a document confirming the sale of a product or service. You will find there the following information:

  • data of the contractor and the ordering party (names, abbreviated names) and addresses,
  • tax identification numbers – these must be European VAT numbers, which differ with a prefix for individual EU countries (you can check if the contractor is an active VAT payer in the VIES database),
  • invoice number,
  • date of issue of the document,
  • name of the service or goods that are the subject of the sale,
  • measure and quantity of goods or the scope of the service,
  • currency of the invoice,
  • net unit price – total value of goods or services, without the amount of tax (most often the tax obligation is transferred to the buyer (reverse charge)),
  • if the payment is made by transfer, also IBAN and SWIFT codes.
  • Some people have trouble reading bills. Watch the movie: “how to read your bill”

Source: https://vimeo.com/140077484

  • In the case of contracts, the more information they contain, the better.

Standard contract elements are:

  • document title – (e.g. Rental Contract, Sales Contract – the title should include the purpose of drawing up the contract),
  • date and place of contract,
  • information about the parties that conclude the contract (first and last name or company name, place of residence or address of the company’s registered office, ID number or tax number),
  • statements by the parties (subject and terms of the contract),
  • identification of the main benefits (determining the amount of money, etc.),
  • statement of the parties’ liability,
  • duration of the contract,
  • terms of termination,
  • annexes,
  • signatures of the parties.

Source: https://www.pexels.com/photo/crop-businessman-giving-contract-to-woman-to-sign-3760067/