How to Write an Invoice
Whether you handwrite an invoice or use software to create and send it, the more it’s written, the faster you get paid. An easily understandable breakdown of services helps you avoid the client asking questions that can delay the process. Writing an invoice is a crucial part of the business process, as it is a formal request for payment from a client or customer. A well-structured and clear invoice helps ensure that you get paid promptly and that both parties have a record of the transaction.
Start with your business name at the top of the document and add your contact details below. This includes your email, phone number, and business address.
If you would like to read more information or learn more about invoice factoring, you can do so here.
Using invoice templates is one-way businesses can save time and effort when creating an invoice. They can also make their invoices look more professional and help clients and customers understand what they’re paying for.
The top section of an invoice should clearly state the client or customer’s name, address, phone number, and email address. This helps ensure the correct person receives the invoice and prevents errors that could delay payment.
The following section should include the date when the invoice was created and the date the goods or services were provided. This helps keep track of when the invoice was issued and helps you follow up on late payments.
How to Write an Invoice
1. Header Information:
Include your business name, address, phone number, and email address at the top of the invoice. This is your contact information, so the client knows who to reach regarding the invoice.
2. Invoice Date:
Include the date when the invoice is issued. This is the date you send the invoice to the client.
3. Invoice Number:
Assign a unique invoice number to each invoice. This helps with organization and tracking. Ensure that your numbering system is sequential.
4. Client Information:
Include the client’s name or company name, address, phone number, and email address. Make sure the client’s details are accurate.
5. Description of Products or Services:
List the products sold or services rendered. Include a detailed description of each item, along with quantities and prices. Use clear and concise language.
6. Unit Price:
Specify the unit price for each product or service. If applicable, include the rate per hour or per item.
Indicate the quantity of each product or the number of hours worked (for service-based invoices).
Calculate the subtotal for each line item by multiplying the unit price by the quantity.
9. Additional Charges:
If there are any additional charges, such as taxes, shipping fees, or discounts, include them separately.
10. Total Amount Due:
Calculate the total amount due by adding up all line item subtotals and any additional charges.
11. Payment Terms:
Clearly state your payment terms, including the due date and the acceptable methods of payment (e.g., bank transfer, cheque, credit card).
12. Payment Instructions:
Provide detailed instructions on how the client should make the payment, including account details for bank transfers or a mailing address for cheques.
13. Late Payment Terms:
If you have specific terms for late payments, such as interest or penalties, include them in your invoice.
14. Contact Information for Inquiries:
Include your contact information in case the client has questions or concerns about the invoice.
15. Thank You Message:
It’s a good practice to include a polite thank-you message for the client’s business.
16. Attach Supporting Documents:
If relevant, attach any supporting documents, such as receipts, purchase orders, or contracts, to provide additional context for the invoice.
17. Review and Proofread:
Before sending the invoice, carefully review it for accuracy, clarity, and completeness. Ensure that all calculations are correct.
19. Keep a Copy:
Maintain a copy of the invoice for your records. This helps with tracking payments and maintaining a clear financial history.
Inv oice Numbers
An invoice number is a unique identifier that should be included on every invoice. This helps make it easy for you and your customer to track payments and find related records.
There are a few different ways to format an invoice number, and the system you choose will depend on your business needs. For example, you might use a system that includes the year in the number (e.g. 2020-001, 2020-002) or a project code (e.g., a sequence of invoices might start with ‘WAB25’).
Another popular option is to use a system that includes your company name in the number. This can help differentiate your invoices from those of other businesses, and it might improve brand recognition.
I nvoice Issue Dates
An invoice should include all the relevant payment terms and due dates. This helps ensure clients know their responsibilities, such as paying taxes and fees, and when they are expected to pay.
Invoices should also note any credits, refunds, or late charges that apply. For example, if you offer a 3% cash discount, the invoice should note this.
The date an invoice was issued is the invoice issue date, while the date when goods or services were delivered is known as the supply date. Invoice terms like “3/10, net 30” are commonly used and can be shown on an invoice using different date intervals.
Invoice Supply Dates
When a business provides goods or services, it needs to be able to track these transactions. One way to do this is by using an invoice.
A vital component of an invoice is its payment terms. These dictate when a customer is expected to pay and serve as the basis for late fees, if applicable.
Most businesses use payment terms such as net 30 or 60, but these can vary depending on the industry and customer contract terms. Adding these terms to the invoice makes it easier for customers to recognize when their payment is due. This helps to streamline the process and reduce the likelihood of late payments.
An invoice’s payment terms are a vital part of its structure. They establish the timeline you expect a customer to pay and can help you avoid disputes and get paid on time.
A professional-looking invoice sets clear expectations for you and the client, reducing the risk of misunderstandings leading to delays in remitting payments. It’s also essential to include the payment methods you accept so your customers know their options.
Listing all line items, including their descriptions and costs, is also essential. This eliminates confusion and unnecessary back-and-forth, resulting in faster payments.
Taxes affect your invoice in ways you might not expect. For example, when M&Y Developers paid for concrete for their home improvement project, they had to pay sales and use taxes – even though the company included it in the invoice.
Invoices should include your and your customer’s business name, address, a breakdown of the services or products provided, pricing and subtotals, and any applicable tax. Checking that these details are accurate can help you avoid costly mistakes.
Odoo’s tax engine uses a set of default taxes based on your location, which you can change in Settings. You can also add specific taxes to an invoice or package item.
Write an Invoice – Other useful links from our Knowledge Centre:
How to Manage Business Finances Correctly and Efficiently
Unlocking Business Potential: Strategies for Long-term Success
The Impact of Sustainability on Ecommerce Businesses
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