How to Write An Invoice: The Complete Guide for Perfect Invoicing
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To succeed in your business, you must know how to write an invoice.
Sounds too far-fetched? We say, No! You might wonder why we place such importance on invoicing when there are so many things to worry about on how to write an invoice. But think about it– the sole purpose of running a business is to earn and make money. In other other words, making profits. Now, to make profits, you need to get paid on time, and fairly. This is where invoicing comes into play. If you cannot come up with accurate, professional invoices on time, there goes a chance of getting paid and making profits.
To create a perfectly written invoice, there are a few important things to keep in mind. It is much more than listing off services rendered or quoting prices. In short, the knowledge of how to write a receipt won’t suffice for generating the perfect invoice. Many businesses face legal hassles and struggle with bookkeeping because they don’t know how to write an invoice. But if you have reached this blog, your days of worrying are over. Here, we have carefully compiled and explained the process of writing a flawless, professional invoice that would eventually speed up your payment cycle and help you make ample profits. So, if you want the secret, read on.
1. What is An Invoice?
To understand why invoices are important, you need to understand what is a business invoice first. To put it in simple words, an invoice is a document given to the buyer by the seller to collect payment. It includes the cost of the products purchased or services rendered to the buyer. Invoices can also serve as legal records if they contain the names of the seller and client, the description and price of goods or services, and the terms of payment.
To write an invoice for services rendered, therefore, small businesses must develop and follow a service invoice template that provides clients with all the project details they need to make a payment. Service-based businesses rely on regular payments from clients for their services. Businesses should ensure their service invoices include a complete itemized list of the services they provided, their business contact details, a specific invoice due date and the total amount owing on the invoice.
2. Why Invoices Are Important?
Invoicing isn’t the most enjoyable aspect of running a business, but it is a necessary requirement for most sales. There are many businesses that don’t understand why they need to issue invoices or the benefits of doing so. Invoicing is not only a tax obligation, but it can also give you control over your business’s cash flow and finances.
So, what does invoice mean for your business? Essentially, businesses need to deliver invoices in order to demand payments. An invoice is a legally binding agreement showing both parties consent to the quoted price and payment conditions. However, there are other benefits to using invoices. For example, it is used to keep a legal record of sales, keep track of transactions for tax purposes, control your cash flow, and make better-informed financial decisions for your company. But to conduct these things without any hassle, you need to learn how to write an invoice and send it to the concerned perfectly in a professional manner.
3. How to Write the Perfect Invoice?
What does an invoice look like? Even if you haven’t sent one by yourself, you must have received an invoice at some point in time as a customer. If you can’t remember, go to the internet and you will find examples of invoices in plenty. This gives you a fair idea of what it contains. But there is more to it. You cannot master on how to write an invoice without knowing the finer details. But more importantly, you need to know more than how to fill out an invoice template if you want a professional touch. Here is what you need to do to create the perfect invoice that gets you your money right away.
Develop A Personalized Invoice Template
All service-based businesses should develop and follow an invoice template that works for them. The template should feature the business’s branding including its logo, common fonts and color palettes. The service invoice template should be simple, and professional while showcasing the most important information on the invoice: your business information, the amount owing and the invoice due date. You can create your own invoice template design yourself or hire a professional to do it for you. Alternatively, you can refer to the examples of invoice templates from the internment and modify them to use for your business.
List Your Business Name and Contact Information
In the header of your service invoice, include your business logo and clearly list your business name, your business’s address, your email address and your phone number, so your clients can easily contact you with any questions about your service invoice.
Fill In the Customer Details Carefully
As a service business, one of the most important things you want to do is manage your customer information properly. This implies that when creating invoices for them, you must ensure that you have the appropriate information on file for those customers, including an accurate mailing address, email address, and point of contact. Having an incomplete mailing address or an incorrect email address can hold up payment processing for weeks. You’ll also want to assign a custom number to each invoice that you create so that you can easily track down the specific invoice for future reference.
Assign Terms and the Invoice Due Date
Assigning terms to your customers simply means that you’re making a determination on how long they have to pay. In many cases, Net 30 is the default term, meaning that your customer or client has 30 days from the date of the invoice to pay you. If they don’t pay before the 30 days is up, you can then apply late charges to the past due amount. For new customers, you may want to use Due Upon Receipt as your payment term, which means that the invoice is due as soon as it’s received.
Based on the nature of your service, you can also include a billing period instead of a due date (relevant for recurring/ continuous service). The billing period will depend on the invoicing cycle your business follows. If you invoice clients monthly, your billing period could be December 1 to December 31, for example, and your service invoice would cover all the work you provided for your client in that period.
List All the Services Rendered
In this section, you describe and quantify the products and services you’re billing for. If you deal in services, there’s some leeway in how you create line items. You could make one for each project, project component, or add-on service. A service invoice should include a detailed itemized list that explains all the services you provided for the client during the billing cycle. To list your services on the invoice you should:
- List the service with a brief description of the work completed
- List the hours worked or the quantity provided beside each service
- List the rate of pay for each service provided
- Finally, list the subtotal for each of the services listed
Along with the list, it is also useful to include a detailed description of the services you provided and what the client received in return. Like the invoice above, if you created a custom report, that information should also be properly displayed in the invoice. . It helps prevent conflict and confusion in the long run.
Include Applicable Taxes for Your Services
The taxes you charge clients for your services will depend largely on where your business is located and how your business is set up. Different states require small businesses to charge different amounts of sales tax.
Fees and discounts
Put any fees and discounts here, such as a late fee or early payment discount.
Include the Total Amount Due
Calculating the price, tax, and discounts, your service invoice should clearly reflect the total amount owing for the services you provided. Like the invoice due date, this information should be prominent, with a large, bold font that pops from the background color of your invoice.
Outline Your Accepted Payment Methods
Determine what payment methods you’ll accept from clients for your services. This can include checks, credit cards, cash, online payments and direct bank deposits. It’s a good idea to offer as many options as makes sense for your business, to give your clients some flexibility. Be sure to provide details on your service invoice of all the payment methods you offer. You can also
Include Terms and conditions
Note any additional terms and conditions here. Some examples include
- Payment terms, including net 30/60/90, EOM, payment on receipt, and payment in advance
- Terms of sale, such as who covers taxes and duties
- Warranty terms
- Late payment fees
- Discounts for early paymen
4. How to Send An Invoice
This depends on how you conduct your business. If you are still following the traditional way of using pen and paper, you might as well create your invoice manually and hand it to your customer. But these days, people hardly run businesses this way. You are more likely to create the invoice using software solutions, or at least, using excel sheets and then, send it to your customers via email.
Another efficient way to send an invoice is via your accounting software. You can create the invoice using the digital tool and get an electronic copy to mail to your customer. Some advanced software solutions also allow you to send the invoices as an image or pdf document so that you can send them directly to their phones.
5. What is the Best Way to Create and Send Invoices?
Now that you know how to send an invoice, let’s get back to the original question once again. In the blog, we have explained how to create the best invoices as per market practice. But more specifically, we have explained what an invoice should contain. As you can see, there are a lot of things to take care of. And if you are doing this manually, you cannot vouch for accuracy. Mistakes are bound to happen in places you don’t even expect. So, to make matters more efficient, people are leaning towards digital solutions.
The most popular digital tool for invoicing is invoicing software. This is also available almost in every accounting software as a feature. But we beg to differ. As far as experience is concerned, the best way to create and send invoices is not accounting software, but field service management software. How? Read the next section to know.
Field Promax– The Best Tool for Invoicing
Field Promax brings you the ultimate solution for billing n invoicing. As a smart, cloud-based field service software, it takes care of all your automation needs, including invoicing.
Now, why do we recommend Field Promax? Because it simplifies your task and brings every necessary detail in one platform. From receiving the work order to organizing the list of services and labor charges, you can find everything you need with just a touch of a button. Besides, it integrates with QuickBooks. This means you can directly use the customer information and services rendered to create a flawless, professional-looking invoice that leaves no room for errors or disputes. Besides, the seamless integration eliminates the need for redundant data entry and prevents double entry, ensuring more accuracy every step of the way.