It’s hard to do most forms of business without some sort of invoice. After all, a small business owner needs to collect payment from their customers, and they need to document their transactions to ensure that happens. Likewise, customers and clients need to know what they’re being charged for and how much to pay. An invoice accomplishes all of these goals.
What is an Invoice?
What is an invoice? An invoice is a commercial document that itemizes items for which a customer must pay. It includes information such as the date, the total amount due and a list of each item being billed along with its individual cost. Invoices also often include payment terms, and they can be created and sent in both electronic or print formats.
How to Create an Invoice
Inexperienced entrepreneurs and new small business owners might not know how to create an invoice to send their clients. Even an experienced business owner might want to redesign their invoice template. Fortunately, it’s easy to design your own simple invoice, whether you create a paper invoice, use a free invoice template or employ invoicing software. The key is avoiding invoicing mistakes.
Wondering how to create an invoice? Check out the following three primary ways that small business owners generate invoices for their clients.
Create a Paper Invoice
Some small companies still use a paper invoice system. If your volume makes paper manageable, you can create a paper invoice master copy and create a few hundred copies to fill out by hand. Be sure your paper invoice includes the same information as an electronic invoice template.
The following steps will help you create a paper invoice:
- Customize a template or create your own template using the software of your choice. Include your company details such as name, logo, address and phone number.
- Leave space in your master invoice template to customize other details on each invoice. You’ll need space for information such as the customer’s name and contact information. Include spaces for pertinent details such as the date, an itemized list of charges with descriptions, the total amount due and the due date.
- Print the paper invoice template and make copies of it. A business operating on a small scale might only need a few copies while another company might need hundreds of paper invoices at its disposal.
- Save your template to print additional paper invoices as needed.
- When you are ready to invoice a customer, fill in the blanks of the paper invoice template to add the customer’s information and billing details, including the itemized list of charges and the total amount due.
Use a Free Invoice Template Online
In the modern business world, many companies use electronic invoicing systems. They complete their professional invoices online and either email them to customers or print each completed invoice. It’s simple to create an invoice using free invoice templates online, and you can access a downloadable sample invoice template from a variety of sources and in an variety of invoice template formats.
Whether you are creating a single, one-time invoice or planning to send recurring invoices, you can use the following free invoice templates online:
- Google Docs – Small business owners can create professional invoices in minutes with Google’s free word processing software. Just download any of a number of free invoice templates from Google Docs and other online platforms, customize the information, send the document and get paid.
- Microsoft Word – A variety of free invoice templates are available for Microsoft Word. The templates can be downloaded from Microsoft or from a variety of other online platforms, then edited and customized using Word before sending on to the customer.
- Google Sheets – Invoice templates can also be customized using spreadsheet software. Google Sheets features an assortment of free invoice templates, or choose from an even bigger selection offered by other online platforms. Just choose the design you like best, choose the edit option and add your custom details.
- Microsoft Excel – Microsoft offers free invoice templates for use with Excel, as well. Instead of customizing a word processing document, users edit the invoice details using the company’s spreadsheet software. Free invoice templates for Excel can be found from Microsoft or from a variety of other websites.
- Online Invoice Generator – A plethora of online invoice generator tools are available for users who want a simple way to create an invoice. These websites feature free templates ready to edit with customer and billing details. Typically no download is needed, and the customized document can be printed or emailed straight from the source.
Use Invoice Software to Find Invoice Templates
Invoicing software and other accounting software is popular because it streamlines the billing process for small businesses while helping them create a basic invoice. In addition to free invoicing templates, the best invoice software for small business often include a variety of other features, including advanced options like time tracking, project management and recurring invoices. Popular invoice software that features invoice templates includes programs from Zoho, Quickbooks, Freshbooks and Wave.
What to Include in an Invoice
Whether you’re designing an invoice from scratch or customizing a free invoice template, you’ll need to include specific information. Even the best invoice software for small businesses allow you to change what’s on your own company’s template. We’ll tell you what’s needed, what’s optional and why. After all, while some details like names and amounts should appear on every invoice, other information might be optional and will vary based on the type of business and services it offers, as well as whether it’s a single or multiple invoices.
Want to include all the pertinent information for a great invoice template? Be sure to include all the applicable details, and it might be the final invoice template you’ll ever have to make.
The business name makes up the heart of the invoice. Who provided the goods or services and who does the customer need to pay?
Part of your small business’s brand is its company logo. Visually represent your company on your invoices by including your business logo, and your customers will see a more professional presentation.
Be sure that your small business’s invoices include your company’s contact information, including address, phone number, email address and company website.
Who is the invoice being sent to? Your company’s invoices should include your client’s information, as well, including at a minimum their name. More professional invoices might also include details such as a client’s address, email address and phone number.
Without numbering invoices, it is difficult to track them and identify who was billed what and when. Every invoice must include a unique number, although the numbering system can vary. Some companies will number all invoices chronologically in the order they occur, while others will use a similar system but add a prefix or extension that identifies each client.
When was the invoice sent? Multiple dates can appear on an invoice, but at the very minimum every professional invoice should be dated with the time the invoice was sent to the client. Be sure the invoice reflects the date it was sent, not the date it was originally generated.
What products or services were provided to the customer? For what will the client be paying? Every sample invoice will provide space for line items with service details, which should specifically label the produce or service provided.
If the service being invoiced was provided on a specific date different from the invoice date, then it also is appropriate to list the service date next to the service details.
Some invoices might require additional details describing the product or service provided. If more information is required, include a specific description on the product or service on the invoice below the service details.
While some invoices need only a single total, such as when invoicing for a single product or service, oftentimes a billing rate is needed to clarify the total amount due. For example, a small business billing for services by the hour will want their invoices to reflect how much was billed per hour and how many hours were billed. Many online sample invoice template tools contain automatic formulas that will calculate totals based on billing rates entered into the invoice generator.
Taxes and Discounts
Whether or not your business must charge sales tax or other taxes will depend on your locality and type of business. However, if your business is required to charge taxes to your customers, or if you have discounts to offer, then you will want a section to itemize these fees and adjustments on your basic invoice template.
Is the customer required to pay the balance by a specific date? Most invoices will include a due date separate from the invoice date, advising the client when they need to pay. Including a due date on your invoice also sends a signal of urgency to the client, helping the small business owner to get paid faster.
Adding small, personal touches to invoices can go a long way in inspiring customer loyalty. Many small businesses will add a personal note to each individual client at the bottom of their invoice, thanking them for their business and providing helpful information, such as where to make online payments.
Payment Terms and Conditions
Will your business accept payment by credit or debit card? Are there specific payment instructions? What happens if a payment is late? Do you allow partial payments? These and similar questions can be answered in the payment terms and conditions section of an invoice.
Create Your Own Invoice Using These Tips
Is your small business ready to send invoices? Check out the following tips to remember when creating invoices to send your customers:
- Keep your invoice simple and easy to understand. Use clear language and specific labels to ensure customers clearly know for what they are being asked to pay.
- Clarify your payment terms. If you expect to be paid in 30 days, be sure and specify that on your invoice. Describe other payment details, such as whether partial payments are allowed and whether you accept credit cards.
- Invoice promptly. Chances are the quicker you send your invoice to your customer, the quicker you will be paid. Provided you’ve delivered the goods or services being invoiced, it’s not too soon to send it.
- Accept multiple payment methods. Not every customer will be paying through the same method. Accepting flexible payment methods, including options like cash, check, credit or debit card, Paypal and other electronic options, will make it easier for customers to pay promptly.
- Send reminders. It might seem an annoying hassle to send payment reminders to customers after you’ve successfully delivered their goods or services, but consider doing it for your own benefit. After all, it’s a worthwhile task if it gets you paid sooner.