An invoice is a bill of sale that documents the transaction in terms of the products or services provided, their quantities and prices, and the total amount owed. It can be in print, although electronic invoices are becoming increasingly popular, as they can decrease the waiting period in between sending out an invoice and receiving payment.
Invoices play a large part in a company’s cash flow, allowing the seller to inform and/or remind the buyer of the amount owed and the terms and conditions of payment. There exist numerous invoice templates online, but businesses and freelancers may want to tailor their invoices to suit their specific purposes. It also looks more professional if you’ve added your own touch to your invoices, even if it’s in terms of layout or design.
Anyone looking to create their own invoices should include the following:
1. The invoicing date
2. Both trading parties and their contact details
Include the names of the trading parties, i.e. the buyer and the seller. Remember to include contact details including addresses, telephone numbers and email addresses for both parties, to make it convenient for either party to contact the other in case of invoice-related queries, clarification or concerns.
3. The invoice reference number
This is a sequential number used as reference. It can take on many forms and any number of digits, e.g you may want to number invoices 0001, 0002, 0003,… (with 1 denoting the first invoice issued, 2 the second invoice, and so on).
You may also want to include the date at the beginning of the invoice number, eg for 12 July 2013, 12072013 or 20130712 (or any sort of different order – we recommend the year first, followed by the month then the day, as that helps you sort invoice reference numbers chronologically, by using the ‘sort alphabetically’ function on Word or Excel).
You may also want to include reference codes for individual clients; if Touch Financial is your client, for instance, you could create the invoice reference sequence 20130712TF0001, 20130712TF0002, and so on. The possibilities and permutations are endless, and depend on your or your business’s administrative needs.
4. The products or services traded
This should be a brief phrase or line summarising the products or services provided.
5. Descriptions, quantities and individual prices of the products or services sold
This should include a more detailed description of the products or services traded, e.g. the size or colour of a product. It should also include an itemisation of prices for each product, and the quantities traded.
6. Payment terms and conditions
It is important that you state your payment terms and conditions, particularly the payment due date. This will increase the number of prompt payments that you receive. Other terms and conditions that you may want to include are accepted modes of payment (e.g. cash, cheque, debit/credit card, Paypal) and penalties for late payments.
Once you’ve included all the basics, consider if there is anything else you can add to add value to your relationship with a client. A ‘thank you’ at the end of the invoice can be a nice touch. Most importantly, remember to follow up on invoices to make sure that they’re paid on time.