If you’re wondering how to create an invoice, there’s a good chance you’re looking to bill a client or a customer for goods sold/services rendered. We’ve compiled a comprehensive guide on what goes into creating an invoice for your business, and how you can do it either manually or using an automated invoicing tool. But first, let’s start with a few basics.
What is an Invoice?
An invoice is a legally binding document that a seller or a business provides a customer, detailing the quantity and the price of products sold or services availed. It is a common practice for businesses to send an invoice in order to bill their customers for any outstanding payments.
Let’s take a look at a typical invoice template.
What Constitutes an Invoice?
While creating an invoice, there are several mandatory details that need to be included. This enables transparency and a clear line of communication.
Here’s a list of all the details you need to include in a business invoice:
#1 The Word ‘Invoice’
This is one of the most important details that you need to include. The word ‘Invoice’ should be stated in bold and near the top of the document. This makes the purpose of the document
#2 The Name of Your Business
Your business’ name is another mandatory detail that you need to include in your invoice. Make it prominent, and towards the top of the document. It’s always better to include your business’ logo as well. This is needed in order to avoid any possible confusion as to whom the products/services were availed from.
#3 Your Business Address and Contact Information
This is an essential part of your invoice, as it gives your customers the information that they need to contact you, in case they have any queries. Do make sure to include your business’ complete address, landline/mobile number, and support email ID.
#4 Invoice Number
In order to keep track of all your invoices and to facilitate accounting, a unique invoice number needs to be assigned to each invoice that you send. For example, you could start with invoice no. 001 for your first invoice, and work your way upward.
Some businesses also include date markers in their invoices, in order to categorize them better. This could be something like invoice no. 0318001, meaning it’s the first invoice for the month of March 2018.
#5 Invoice Date
In most companies, payment policies require the customer to pay the business within a certain time period from the date of invoice generation. In order to facilitate this, the date of generation or the invoice date has to be mentioned.
It is also a best practice to include the date of delivery
#6 An Itemized List of Products Sold or Services Rendered
This is the most important part of any
Make sure to provide specifics of the product/service description, quantity, rate, discount, amount, and the subtotal. You can also include any other billable expenses that the customer has to pay for, in this section.
Here’s an example of a properly itemized invoice description.
#7 Terms of Payment
Every business needs to have set terms when it comes to receiving payments from customers. These terms might differ based on your type of business, locality, industry standards, and business needs. In order to avoid any mishaps, it’s always a good practice to discuss the basic terms of payment with the client beforehand and put it in print on the invoice.
Here’s an example.
#8 Customer/Client Information
Every invoice requires a ‘Bill To’ section, where you state the customer’s name, address, and contact details. As is the case with your own business information, the customer’s details are needed to avoid any confusion as to whom the goods/services are sold to.
#9 Pay By/Due Date
Mention the due date for payment clearly on your invoice, so that the customer knows when to pay and has enough notice to get his/her finances straight.
#10 Sales Tax
Make sure to include all sales tax details as part of your total amount due. Sales taxes may differ depending on the location of your business, so do check your local tax bureau for the specifics.
These are the most important details that you need to include in your invoice. That being said, how do you go about creating one?
Well, there are two ways to go about it. You can either create manual invoices and maintain your own filing system, or you can automate it through a third party tool.
Manual Invoice Creation
This can be done by manually creating an invoice format using a software like MS Excel, and filling in the details. The drawback here is that indexing and maintaining a repository of invoices becomes a tedious task. But on the other hand, manual invoices are also difficult to hack.
Here’s a video tutorial on how to create a manual invoice.
Automating your invoicing process can save you a lot of hassle. There are a number of online invoicing tools that you can make use of. Here’s a list of few such tools.
P.S. You can also check out more invoice templates here.
So there you go! Now you have all the information you need to create stellar invoices that are rich in detail!