What is an invoice? How to create a professional invoice?
For any business, invoicing is an unreplaceable process, ensuring the smooth operation of the accounting department. Without an invoice, the agreement between the buyer and seller of the goods or services can not be recorded and specified clearly.
Because the invoice is so popular in the business world, it may be taken for granted. However, there still have many things behind this simple term, which we have not known.
How do you create an invoice? Have you assigned the invoice number properly? How do you keep track of your invoice? How to deal with late payers?
We hope that this guide can walk you through the ins and outs of invoicing, everything from creating a professional-looking invoice to handle late-paying clients.
Table of content
- What is an invoice?
- E invoice
- What is an invoice used for?
- How to create an invoice?
- How do you invoice clients
What is an invoice?
An invoice is a commercial document sent to a buyer, specifying the amount and cost of products or services that he or she already purchased. We consider invoice as written verification of the agreement between the buyer and seller of the goods or services.
An invoice indicates that a buyer owes money to a seller. Hence, from a seller’s point of view, an invoice for the sale of goods or services is called a sales invoice. On the other hand, seeing from a buyer’s point of view, an invoice for the cost of products or services the buyers have already purchased is called a purchase invoice.
There are a few financial forms that are similar to an invoice, but play different roles.
An invoice is not:
- Purchase order: a purchase order is sent by a customer to a vendor, requesting goods or services. That means it was sent before the invoice is ever created
- A bill: that is used to collect immediate payment.
- A receipt: a simple, official acknowledgment that an order has been filled and paid for
An E-invoice is a paper document mailed to the buyer, but these days sellers can request payments online with electronic invoices. This term covers a board range of final forms, including invoices and receipts, purchase orders, debit and credit notes, payment terms and instructions, and remittance slips.
Digital invoices are typically delivered via email, web page, or app.
E-invoice is beneficial in the following ways:
- Permanence and resistance to physical damage
- Ease of searching and sorting for specific names, terms, or dates
- Can be printed and reproduced on demand
- Useful for data collection and business intelligence
- Save paper
What is included in an invoice?
In order to be considered as legal business verification for the transaction, an invoice usually includes the followings elements organized by sections ( the header, body, and footer)
- Invoice number: the seller assigns this number to distinguish this invoice from all others. It’s usually shown toward the top of the page, in the top (header) section.
- Invoice date: The date the product was sent or delivered or the date the invoice was sent The terms of payment: This part will explain the means of payment, when the sum should be received, any cash discount details for early payment, late payment fees, etc.)
- The seller’s name and contact details
- The buyer’s name and contact details
- A line detailing the product/service
- Billable expenses: An expense that you have incurred on behalf of your client/customer for performing work, services, supplies
- Total charges: The summary of all costs associated with the items or services being billed
- Taxes or other costs due: Sales tax, shipping charges, and any additional fee is applied to the invoice
- Total due: This is the full amount owed by the customer, covering applicable sales tax and any other charges
- Additional notes or comments: Some business owners may also add `a special note, for example, date and mode of shipment or delivery to the customer on the invoice.
What is an invoice used for?
An invoice plays an essential role in the sales process because it helps to record the sales transactions a business makes with its clients. Companies use invoices for a wide range of purposes:
- To request timely payment from clients
- To keep track of sales
- To track inventory, for businesses selling products
- To forecast future sales using historical data
- To record business revenue for tax filings
How to create an invoice?
Having a professional invoice template allows you to get paid faster and spend less time managing your billing process. Now, we are going to share with you a sequence of design tips to help you create a professional invoice.
Create a basic invoice
When making an invoice from scratch, you need to ensure your invoice presents all of the information your customers need.
- Your business information
- Your client’s contact details
- Invoice information
- Your payment terms
- An itemized list of services
- Applicable taxes
- Additional note.
Use free invoice templates
You can generate a professional invoice by using free invoice templates from a variety of platforms.
We recommend you to use the following formats
- Free PDF invoice template
- Free Word invoice template
- Free Excel invoice template
- Free invoice for Google Docs
- Free invoice for Google Sheets
Using cloud-based invoicing solutions is an excellent option for your business accounting. You may be interested in this alternative because of convincing reasons
- The ability to custom fonts, color schemes, change the style of your invoice and include logos
- Make the invoicing process easier and faster the payments. Because your clients’ billing information is stored in the system and invoice numbers are generated automatically, clients can pay directly from the invoice so that you can get paid faster.
- Keep track of your sales
- Easy to access from anywhere
- Ensure your business and client information security
- Simplify report task
Here are the suggested invoice providers that you can consider to ask for a service
- NetSuite ERP
- Sage 50Cloud
- Zoho Invoice
- Sage business cloud accounting
How do you invoice clients?
Right after you complete your work on a project, send an invoice to customers. The details of the work will be fresh in your mind, and you should receive payment as quickly as possible.
Also, to request that the customer issue payment upon receipt, you can customize the due date of each invoice by adding a message for the recipient. This can lead to faster payment returns.
You should not invoice clients on Sundays. They are least likely to pay an invoice received on Sunday because simply, it’s the laziest day of the week.
Today, with the advance of technology and software, you can create and send the invoice easily at any time, from anywhere as long as you have an internet connection and smartphone, tablet, or computer.
In a nutshell, the invoice is a critical business document with fundamental functions that we have mentioned above. We this post pave the new way and simplify the financial management process.
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