Once a good or service has been sold to a consumer, the next logical step would be to send them an invoice. Sure, invoicing software for small businesses should help you get the job done quicker, but it doesn’t exactly teach you how to write an invoice.
When drafting an invoice, there are quite a few things that you must forget including. Today we’ll look at what exactly invoices should contain so you can write them correctly.
What’s an Invoice?
A form of a bill that asks customers for payment of goods or services is called an invoice. In it, you usually find a description of the products bought or services rendered and their prices.
Companies use invoices to help keep track of their income and sales records, which are crucial for tax and accounting purposes. Take note that invoices and receipts are different, as the latter acknowledges the receipt of payment.
How to Create Invoices Correctly
Knowing how to make an invoice correctly can save you a whole lot of trouble down the road. Follow the tips below so you’ll know what to include in your invoice.
Related: Best Meeting Minutes Software Solutions for Your Company
1. Make Sure You Put Your Invoice Together Professionally
If you’re a fairly unknown business, you’ll want to do things to earn the community’s trust. That includes seemingly little things like creating a professional-looking invoice. Don’t just give your customers a piece of ripped paper from a notebook because they’re not going to be happy about that. Plus, it could end up getting you reported for not being professional enough, which is the last thing you want.
Put more effort into this invoice-making business by using a high-quality sample template, professional-looking fonts, and great styling. Then, incorporate your logo with the appropriate colors into the whole thing.
2. Indicate That Your Invoice Is an Invoice
It’s not uncommon for customers to mistake an invoice for something else, which becomes their reason for losing it. Even the word “invoice” on your invoice can already increase your chances of getting paid on time, as it can make the document stand out among all the other documents the customer has.
Generally, putting the word “invoice” should be enough to indicate the importance of the document. However, it should also come with a one-of-a-kind identification number. It serves as your reference and prevents the creation of a duplicate invoice.
You may use numbers in an ascending sequence or letters fronting a set of numbers, which indicate a particular client, and serve as your invoice identification number.
3. Include Your Company’s Name and Information
Aside from your business name, there are other details about your company to include in the invoice. The invoice should indicate your company’s address and contact number, as well as its formal registered name and registration number in case it’s a limited company.
Likewise, you should write down the customer’s name and address on the document so that it gets to the right person. Keep in mind that limited companies should add their directors’ names on the invoice, too.
4. Describe the Bought Goods and Services Clearly
While you don’t have to write long descriptions, you need to make sure descriptions are detailed enough for the customer to know exactly what they’re being charged for. Many times payment delays resulting from the consumer thinking he or she is paying for the wrong items.
Once the items have been described clearly, you should add the quantity and the price beside them.
5. Add Up the Total Amount Owed by the Customer
Besides adding up the costs of individual services and goods, you must place the total amount owed. If you agreed with the customer about a discount, make sure this is also indicated in the invoice. Then, subtract the discount amount from the total cost. You should add up the VAT if applicable.
6. Set the Payment Terms
You have full control over the payment terms, so set them most conveniently. The 15th and 30th of the following month are fine, but know that those aren’t your only choices. You could opt for a shorter payment term if that’s what you want.
You can even set the terms to one week or less. Regardless of how short or long this payment term is, you must make the terms crystal clear to your consumer before sending the invoice. It is also important to note how payments should be made and the consequences of late payments.
Let the Software Do the Work
Nowadays, it’s perfectly okay to let the software do all the work. In fact, it’s even recommended that you do so to save time and ensure an error-free process. Still, it’s advised that you know how to do things manually on the off chance the software fails and you only have your skills to rely on.
