How to Write an Invoice

Whether you are a freelancer or a small business owner, the invoice is an important segment of your financial structure. Hence, for clarity, accountability and future references, writing and filing the invoice is vital. So, what is an invoice? Essentially this is an official document that lists the services and goods that the customer might have received and it also states the amount that you have to pay for the same. Hence it is important that you know about How to write an invoice.

What Makes the Invoice so Important

The Invoice, as stated earlier is an essential piece of document that can function both as a receipt and a sales contract. Hence, it is important that you know how to write one up, as it can help in smoothing future references and also streamline the processing. Not to forget that it also functions as a single mode, efficient mode of contact both between the merchant and the client. So, let’s take a look at some of the vital points to take care of when writing an invoice:

What to Include in an Invoice

Here is a list of some of the most important aspects that one needs to include when writing an invoice:

• Your name or company name
• Your contact information
• The customer’s company name and address
• The date the goods or services were provided
• The date of the invoice
• A breakdown of costs that display prices, hours, or quantities of the goods and services delivered
• The subtotal of net costs
• Discounts if any 
• Additional taxes if any
• The total amount owed
• The payment due date
• The mode of payment

This is the basic ‘sketch’ or the outline of what needs to be included in the invoice. While it might seem to be quite a lot, each one of these itineraries is essential for an invoice.

Read More-: How to Invoicing Your Customers Using Sage 50 Accounts

To Structure the Invoice

Here are some of the most important steps when it comes to structuring the invoice:

Branding of the Header

Branding of the header in your invoice depicts your professionalism and helps to build your reputation along the market lines. This comprises the company logo, special fonts, and distinct colours, in order to make it distinct to your brand. 

In the case of a freelancer, you might not have a brand or a logo, but your full name should be just fine to serve the purpose. Also, make it a point to ‘personalize’ or specialize your invoice to set it apart from the other competitors in the market.

The Details: Contact and Others

This is the next important step that requires you to clearly state your company’s name, relevant contact information, Address, and Phone number. This needs to go up at the top of the document for it to be easy for the recipients to know exactly whom and where to contact.

The Required Dates

The dates are an important piece of information as they provide the context and reference point in case you need to track down a certain payment. The most important dates include:

• The date you sent the invoice
• The date you rendered your goods and services
• The date due date for payment

The Breakdown

This is essentially the breakdown of all the costs and totals in order to allow the customers to know exactly what the payment is for. For this, you need to enlist goods, services, the quantity of the time, the unit cost or the rate, and the total of all the services and goods.

Here, you also will have to calculate the totals. This needs to include:

• The gross total—the total of all goods and services before any tax or discounts
• Any tax
• Any discounts
• The net total to be paid—including any tax or discounts

Be sure to be as accurate and precise as possible, as a tiny mistake can cost you a ton. This will not only lead to losing your customers in the future but also your reputation in the market.

The Mode of Payment

This comprises the best way to pay your customers and what is owed. This comprises of you deciding on what mode of payment you need to select: card, cash, direct bank payment, PayPal, Crypto or any such mediums. 

Note: Be sure to highlight the time frame that you expect the payment to be made at. This is to ensure that the customer is not in any confusion about their obligations.

Email

Now, you need to be sure of how you wish for the payment to be set out. One of the best methods, as suggested by the experts is to attach the same accompanying an email. The invoice in this case can be in PDF format, to ensure that no information is edited and manipulated. 

Within the Email, it is essential that you include a clear subject line consisting of your business name and ‘Invoice’ stated in it. This will clearly state the purpose of the email straight away, hence offering the priority you expect. Next, within the body, you need to explain what are the services you are providing and what are the other inclusions. 

However, there are certain downsides to using email for invoices, as it can be a bit tough to track down. This is mainly because one cannot know for sure if it has been received, read or not.

Invoice Writing: Important Tips

Initially, the invoice was paper-based documents. In such cases, the paper-based invoice was physically mailed to the clients and heavily depended on the efficiency and ethics of the postal services. Now, all invoices can be sent digitally, thus making it easier to track, create and send them as well. So, here are a few important tips on how to write an effective invoice:

The Templates

With the help of the Document templates it is easy to prepare the format of your invoices in a single go. Now, you simply have to fill in your required details and you are good to go. 

In this case, you simply have to upload your document, add and save the format and that’s it, you are done. This way, every time you need to send your invoice, you have it all ready to be sent.

Some of the more important invoice templates are FreshBooks, and InvoiceHome which can be used in Google Sheets, Word or even a simple PDF. Now you just have to customize the templates with your branding and add them to your workflow.

Keeping Track of your Invoice

There are times when your business sends in high volumes of invoices, thus, making it tough to keep track of it all. For this, the experts recommend a document management system that can easily help organize your invoices for you. This way it can be accessible, easy to store and can also be retrieved from a central place. One such example is ‘Dropbox’ which can automatically sync all the documents and keep them safely tucked away in the Cloud for safekeeping.

Integration of Invoices into the Workflow

One of the best ways to streamline the sales cycle is to connect the contract and the invoicing process. For instance, payment and the billing solutions like AdvicePay make it easier to send, and sign contracts, invoices and documents.

The Vat Invoice

Value-Added-Tax which implies consumption tax that is used throughout Europe Union and other countries. VAT is exercised across 160 countries worldwide and is also applied to goods, services and other taxable supplies. In the case of the EU, the VAT is paid at the time of purchase of each product and the VAT varies according to the member state. Once you are VAT-registered that you can start using the VAT invoices. However, the exception lies in case the customer is in the EU and has a valid VAT number, in this case, you don’t have to charge them VAT on your invoices.

Also Read-: Sage 50 Invoice Not Posted

Conclusion

There you have it people, all that you need to know about the importance of invoice writing. However, if you still encounter some doubts regarding the same, be sure to reach out to our team of experts at +1800-964-3096 or drop a mail at [email protected] or join our LIVE sessions for details at www.accountingadvice.co.

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