The process of issuing an invoice is pretty simple, and once you get the hang of it, you can streamline the task with a base template. This article goes through everything you need to know about creating an invoice.
What is an invoice?
An invoice, often known as a bill or a sales invoice, is a document issued by a company as documentation of a transaction and a request for payment for a service or product supplied.
8 Items you need to include in an invoice
It’s vital to be adequately compensated for your work, but getting paid on time is equally critical to avoid cash flow difficulties. A well-designed invoice may make all the difference in getting paid on time and without complications caused by ambiguous information.
Here’s what you should put in your invoice to make it seem professional and provide all of the information your clients need to make a payment.
1 – Company Name
The first step in producing an invoice is to include the most crucial part of your invoice: your company name. It shows your personality and establishes your brand.
2 – Contact Information
Include your name, phone number, email address, and physical address. This information helps your clients to get in touch with you if they have any questions about the invoice, and it also allows them to contact you for future business.
In a ‘Bill To:’ section, include your client’s contact information, including their billing contact name, phone number, email address, and address.
3 – Invoice Date & Number
Make it a practise to include the invoice date on every invoice you send out. For both you and your clients, this will make filing invoices a lot easier.
Create a simple invoice numbering system in which each invoice is assigned a unique number. You’ll thank us later because this will make it much easier for you to stay organised and manage your invoices for bookkeeping needs, especially during tax season. When you need to discuss a specific invoice with a client, it will also be a lot easier.
4 – Itemised List of Services
If you’re a service provider, make a list of the services you’ve provided to your client so you can both maintain track. Begin by inserting a four-column table with the following information:
- A brief description of the service provided
- The number of man hours or the work quantity
- The remuneration
- The subtotal for each service
If you’re selling things, the item description is the most important portion of the invoice. It’s vital to divide your invoice into at least four independent columns, much as your service invoice: quantity, description, unit pricing, and line total.
5 – Payment terms
According to industry standards, small enterprises often use these three types of payment periods. It also depends on your cash flow requirements and your client relationship. The following are some of the most frequent invoice payment terms:
Payment in Advance – Your client will be required to pay in full before receiving your goods or services under this payment period.
End of Month (EOM) – This means that the full amount of payment has to be made within the amount of days stated after the invoice issuance month-end.
Month following invoice – Your payment period might be simplified to ‘15 MFI’ if you expect the whole amount to be paid on the first 15th of the month after invoice issue.
6 – Discounts
If you have a long-standing relationship with your client, you may wish to provide a goodwill discount. This discount, which might be a real amount or a %, should be reflected in the invoice.
7 – Goods and Services Tax (GST)
If your business is GST-registered, you must send tax invoices or customer accounting tax invoices for standard-rated supplies. On all of your tax invoices, simplified tax invoices, and receipts, make sure your GST Registration Number is visible.
8 – Final Amount Due and the Due Date
At the bottom of your invoice, clearly specify the entire amount owed (including any applicable taxes) as well as the payment due date. Incorporating a due date on your invoice is a professional and courteous way of reminding your client when they should pay.
Keeping track of your payments might be time-consuming and distract you from your company’s primary operation. Leave the bookkeeping and accounting to us at Crystal Clear so you can spend your time doing what you do best: growing your business.