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Overview

Self-billing is a process where the buyer (your platform) creates the purchase invoice on behalf of the seller (supplier). This is common in marketplace platforms for:
  • Automated payout statements to sellers
  • Simplified supplier onboarding (no invoicing system required)
  • Consistent invoice formatting across all suppliers
  • Easier reconciliation of purchases

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What is self-billing?

In traditional invoicing, the supplier creates and sends an invoice to the buyer. In self-billing: 
Platform creates invoice → Supplier accepts → Platform pays
Your platform acts as both the invoice issuer and the customer, creating purchase invoices that represent amounts owed to suppliers.
Self-billing requires prior agreement with suppliers and must comply with local tax regulations. Ensure suppliers consent to this arrangement and that it’s permitted in your jurisdiction.

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Use cases

Self-billing is ideal for:
  • Marketplace platforms: Record commissions and payouts to sellers
  • Gig economy platforms: Document contractor payments
  • Wholesale platforms: Automate purchase recording from multiple suppliers
  • Dropshipping: Track costs from fulfillment partners

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Prerequisites

Before implementing self-billing, ensure you have:
  1. Your organization set up with ownership=self
  2. Supplier organizations created with ownership=external and role MERCHANT
  3. Tax registrations configured for applicable jurisdictions

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Invoice lifecycle

Self-billed invoices follow the same lifecycle as regular invoices: 
DRAFT → FINALIZED → (CANCELLED)
The key difference is that flow=purchases and your platform’s organization ID is the customer_id while the supplier organization ID is the supplier_id.

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Step 1: Create a purchase invoice

Create a purchase invoice with the supplier as the issuer and your platform as the customer. 
curl https://api.nocotax.app/invoices \
  -u ${ACCOUNT_ID}:${YOUR_API_KEY} \
  -H "Content-Type: application/json" \
  -d '{
    "flow": "purchases",
    "supplier_id": "org_supplier_456",
    "currency": "EUR",
    "automatic_tax_calculation": {
      "enabled": true
    },
    "items": [
      {
        "title": "Payouts on sales - Order #12345",
        "quantity": 1,
        "unit_extratax_amount": 15000,
        "product": {
          "tax_code": "D10000000"
        }
      },
      {
        "description": "Tipping",
        "quantity": 1,
        "unit_extratax_amount": 8500,
        "product": {
          "tax_code": "D00000000"
        }
      }
    ]
  }'

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Key parameters

ParameterDescription
flowMust be purchases for self-billing
supplier_idThe supplier/seller organization ID
currencyThree-letter ISO currency code
automatic_tax_calculation.enabledSet to true to calculate input tax
itemsArray of up to 10 line items for services/goods purchased
The supplier_id and customer_id are reversed compared to sales invoices. For purchases, your platform is always the customer.

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Step 2: Review and adjust

While in DRAFT status, you can:
  • Review calculated tax amounts (potential input VAT to claim)
  • Add or modify line items
  • Update amounts or descriptions
  • Set payment terms
The draft does not yet affect accounts payable (AP) balances.

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Step 3: Finalize the purchase invoice

When ready to issue the payout statement, finalize the invoice: 
curl https://api.nocotax.app/invoices/inv_456/finalize \
  -X POST \
  -u ${ACCOUNT_ID}:${YOUR_API_KEY}
Finalizing will:
  1. Assign a sequential invoice number
  2. Set the invoice date to the current date
  3. Calculate due_date if payment_terms were provided
  4. Update the supplier’s accounts payable (AP) balance
  5. Lock the invoice from modifications
  6. Generate the PDF file for the invoice.

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Step 4: Record the payout

When you pay the supplier, record the payment: 
curl https://api.nocotax.app/invoices/inv_456/attach_payment \
  -X POST \
  -u ${ACCOUNT_ID}:${YOUR_API_KEY} \
  -H "Content-Type: application/json" \
  -d '{
    "transaction_data": {
      "amount": 23500,
      "currency": "EUR",
      "transaction_type": "transfer",
      "reference": "WISE_TRANSFER_789",
    }
  }'
This updates the supplier’s AP balance and marks the invoice as paid.

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Tax considerations

Self-billing has important tax implications:

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Input VAT recovery

When automatic_tax_calculation is enabled, Nocotax calculates the input VAT you can potentially claim back on purchases, based on:
  • Your platform’s tax registrations
  • The supplier’s tax registrations
  • The nature of the goods/services purchased

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Reverse charge mechanism

In some jurisdictions, B2B services may be subject to reverse charge, where the buyer (your platform) accounts for VAT instead of the supplier. Nocotax handles this automatically when:
  • Both parties have valid tax registrations
  • The transaction qualifies for reverse charge

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Record keeping

Maintain records of:
  • Self-billing agreements with suppliers
  • Supplier consent to self-billing arrangements
  • Invoice copies provided to suppliers
  • Proof of payment

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Best practices

Send suppliers copies of self-billed invoices for their records. They’ll need these for their accounting and tax compliance.
Let Nocotax handle invoice numbering automatically when finalizing. This ensures sequential, compliant numbering.
Make line item descriptions clear and specific. Include order numbers, date ranges, or other references that help suppliers reconcile.
Match Nocotax invoices with your internal sales/order data regularly to catch discrepancies early.
If you operate in multiple currencies, ensure each invoice uses the correct currency for the supplier.

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Credit notes for purchases

To correct a self-billed purchase invoice, create a credit note: 
const creditNote = await nocotax.creditNotes.create({
  flow: 'purchases',
  supplier_id: 'org_supplier_456',
  currency: 'EUR',
  invoice_id: 'inv_456', // Original invoice to credit
  items: [
    {
      description: 'Correction: Order #12345 was cancelled',
      quantity: 1,
      unit_extratax_amount: 1500, // Credit the original amount
      tax_code: 'D10000000'
    }
  ]
});

await nocotax.creditNotes.finalize(creditNote.id);
The credit note will reduce the AP balance and the amount_remaining on the original invoice.

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Next steps

Customer Invoicing

Learn about the sales side of the flow

Credit Notes

Handle corrections and refunds

Organizations

Manage suppliers and customers

API Reference

Explore the complete API