Most consumers have experience with invoices and don’t give much thought to their creation or components. However, now that you are on the other side of the process as a business owner, you may need an introduction to this vital part of running a successful company.
Once you know exactly what it is and how to create an invoice, you will find that your operations run more efficiently and your customers are happier.
What is an invoice?
Simply put, an invoice is a business document provided by you, the seller, to the buyer. Its purpose is to request payment for the products or services you have provided.
In addition to specifying details about goods or services, the invoice also defines the time frame, total due, invoice due date, and any important terms.
Beyond furnishing this information to the buyer, the invoice also stands as a permanent record of the transaction that can be referred to for accounting, tracking and taxation purposes.
Elements of an invoice.
Invoices can range from being a bare-bones chronicle of charges to an extensively customized bill complete with logos and branding details unique to your company.
Regardless of how simple or fancy you make it, however, the document should contain several important basic components.
Company details.
Start by showcasing your company details. These should include your name, address, and contact information.
Next, indicate similar specifics for the person or business you are billing, including contact or company name, and address.
Invoice details and payment terms.
Then, be sure to clearly set forth the invoice details. This section is where you will give the invoice number, the invoice issue date, due date, and any payment terms to which the customer must adhere.
Be sure to write out an itemized list of the goods provided or services rendered that also specifies the quantity of each one, the unit price, the total amount that is owed for each item, and a brief description if necessary.
Costs and payment methods.
Finally, don’t forget to talk about payment specifics. Specify the total amount due, including any taxes to be paid.
The finishing touch should be to let the customer know what methods they can use to pay, including by mail, via ACH transfer, via your website, recurring invoices, or over the phone. If you are not sure which payment types your invoicing system is configured to accept, contact your merchant services provider.
Tips for how to write an invoice.
Invoices are more than just bills. When done in a polished, customized way, they can function as ambassadors for your company, enhancing your relationship with buyers, and boosting the reach and scope of your brand.
Dedicating time to implementing some simple invoice preparation tips will help to expand your business’s reach.
Design.
First, begin by coming up with a design that is in keeping with your mission and brand voice. Be sure that colors and logos are consistent across all channels to create a uniform experience, minimize confusion, and enhance awareness of your unique brand.
Tone.
Second, focus on the transparency and professionalism of your invoice. This can be accomplished by clearly displaying information about your company as well as the buyer you are billing.
Essential elements.
Third, it’s time to get into the meat of the invoice. This is where you carefully define exactly what amount is due and when you expect the payment.
Essential elements that should appear prominently in this part of the document are the unique invoice number assigned to this transaction, the invoice date when the bill was sent to the client, the date by which you expect the payment, and the agreed-upon payment terms.
This final detail refers to information about how long the client has to pay the bill. The most common options include net 30 (amount is due within 30 days of the invoice issue date), due upon receipt (client is expected to pay the invoice amount immediately), and net 60 (payment is due within 60 days of the issue date).
Description of products or services.
Fourth, be fully transparent about all charges. Carefully set forth in line items format all of the goods and services for which you expect payment.
Thoroughly describe each piece of merchandise or service that you provided, the quantity, cost per unit, and the total amount charged for each.
If applicable, be sure to also specify the amount of tax that is to be charged. In order to make it easy and clear for your customer, include sections for subtotal, tax amount, and total due.
Payment options.
Fifth, now that you have indicated the amounts owed, it’s time to let the customer know about their various payment options.
These can include by mail, credit or debit card, ACH or wire transfer, online payment through a digital wallet, and by automatic payments. Offering several options increases your chances of receiving the funds you are owed quickly and in full.
Delivering your invoice.
In today’s fast-paced digital world, most invoices are sent electronically via email or text. Electronic invoicingis not only convenient for your customers allowing them to pay using whichever digital payment method they prefer, but it also generally helps you to get paid faster. Sending paper invoices via mail is still necessary for some businesses.
In these cases, it’s helpful to your customers to give them the options for making their payment online, sending a check, or making a payment via phone.
Invoices can be as simple or complex as you like as long as they contain all of the essential details elucidated above.
Even in their most scaled-down form, they serve as effective customer-facing devices that can boost your credibility, make your branding memorable, and inspire your customer to resolve their bill quickly and fully.
If you have questions about how to use your current invoicing system to the fullest or if you think you need a system upgrade, contact your merchant services provider today.
