How an invoice looks can make the difference between getting paid the same day or chasing a late payment for weeks.
Clients get frustrated from being unable to clearly see what they need to pay, putting it off for later and forgetting about it.
Even when you finally do get paid you still come off looking amateur.
Our invoices usually get paid in three days and we’ll share our tips on how a professional invoice should look like, what it must include and how you can easily make one yourself.
But first, let’s understand what’s an invoice so the contents of one come naturally.
What Is an Invoice?
A normal business transaction involves two parties – a buyer and a seller.
The seller provides goods or services to the buyer and once the job is done they want to get paid.
The buyer is left owing money to the seller.
But how much exactly? And for what are they specifically paying for and how long do they have to make a payment? What are the payment options?
To answer these questions the seller sends an invoice detailing the specifics.
So the buyer knows what they owe, they’ve received an itemized list of all the goods and services to be paid for and they know the transaction terms.
The seller made it easy for the client, this makes them happy and they send the money to complete the transaction.
From the seller’s perspective, invoices are also tax documents.
The government wants to know what was your revenue and what taxes you might’ve collected and keeping a copy of all invoices is necessary for this.
What Should You Include in an Invoice?
There is no legal format for what an invoice should look like, besides that it should show taxes for tax registered businesses.
You can simply write an email to your client to transfer $100 to your paypal for mowing their lawn.
But, if you are dealing with businesses, sending an arbitrary invoice format puts you at risk of not getting paid.
And even if you are not dealing with businesses, sending a legit invoice is so easy now, so there is really no excuse to avoid doing it.
Not to mention how it gives your business a professional appeal and gets you taken more seriously.
These are the typical items an invoice should include:
- The word “Invoice”
- Name and address of the buyer
- Name and address of the seller
- Invoice number
- Invoice Date
- Terms of payment/payment due date
- Description of items/services purchased
- Price of items/services
- Applicable taxes
The Word “Invoice”
You can call it whatever you like, but if you put “Make it rain client!” you run the risk of not getting paid.
Name and Address of the Buyer
List the full name/company name and address of your customer so there is no doubt in their mind that the invoice is referring to them.
Name and Address of the Seller
List your full name/company name and address so the customer can have the right information on their records.
An invoice number is used to track the different invoices you send and every invoice should have its own unique number.
Tip: if you are sending your first invoices you might want to avoid numbering them with one digit numbers as it shows that you are just starting out. You could simply start with a higher number or choose a different numbering system.
This is the day that the invoice was created and it is critical to include it because it starts the countdown for when the payment is due for the buyer.
It’s visually appealing when the invoice date and due date are next to each other, but you should also state due date in a sentence further below.
Payment due date/Terms of payment
This tells the client how long he has to make a payment.
It is set up considering the payment terms. If the payment is due within 30 days and you issued the invoice on September 1, payment is due October 1.
To make it easier simply write “Payment is due within 30 days” and avoid using net terms(net 30, net 14, negative net 30…) as this has shown to prolong the time to get paid.
Also list the different payment methods clients can use to make a payment, whether it’s cheque, cash, bank transfer, PayPal, or credit card.
Description of items/services purchased
Remind the client what specifically they are paying for.
The more descriptive you are the better, because even though they know they have to pay you, giving them a clear reminder of the scope of the work makes the client feel more at ease to part with their money.
So instead of simply itemizing “Website design” you should write: Design of new company website including design meeting on 6.8.2020. and three revisions. Final website was live on 29.8.2020.
You want the client to think “That’s right, they did a good job and I am proud of the result. They deserved my money”.
Best practice to present this information is using a table with columns including:
- Item name
- Invoice Total
Most countries charge some form of sales tax on transactions involving taxable goods and services.
You will need to consult with your local tax bureau to make sure you are charging the right tax in the right amount to your clients.
TIP: If you are not VAT registered it’s a nice touch to include “No VAT to pay” in the notes, as businesses are so used to dealing with VAT registered businesses and might get confused when they don’t see any VAT.
Optional Things for a Final Touch
We covered the essentials for a proper invoice and here are some additional items which leave an impression of professionalism and style.
- Link to terms and conditions
You may not have terms and conditions set up yet. But once your business gets off the ground you might want to cover more invoicing details, ie. what happens if a client does not pay you on time…
- Payment stub
If customers are mailing you checks, this is gonna attach a payment stub to the invoice so they can cut it out and mail it back with the check.
Here is how it looks like in Invoice Quick
A brand is what differentiates the value of two companies doing the same thing by billions of dollars. Take a plain $4 T-shirt, put a swoosh on it and now it’s worth $50… If you have a logo make sure to include it in the invoice header to give your business the presence it deserves, especially if you are providing creative services.
- Bank details
If you are accepting bank transfers don’t give clients an excuse to prolong payment, ie. you didn’t include your bank details. At least show your account number, sort code and what payment reference you want them to use. For international transactions you can add your bank’s IBAN and SWIFT numbers.
- Your PO number
If you are given a purchase order number make sure to include it on the invoice or you won’t get paid right away! You’ll have to reissue the invoice and prolong the payment.
- Thank you note
People crave feeling important so use this to your advantage in the final note to a client. Thank them for trusting you with their issue and express hope to work again in the future.
Anatomy of a Professional Invoice
Now that we have the essential and optional items let’s see how they all fit together to make a professional invoice.
Remember, the invoice has one purpose – to enable your client to pay you! So the best looking invoice is not the one with amazing colours and design, it’s the one which presents the necessary information clearly and precisely.
If you can make an invoice colorful and stylish at the same time that’s awesome, but not essential.
How to Make an Invoice
There are so many ways you can make an invoice.
The most “conditioned” way is to use software such as Word or Excel right?
They do offer plenty of templates.
But the problem comes when you find a template you like with a field you don’t need and it becomes a mess to remove it.
If you want something more stylish you could use visual creation tools such as Canva.
There are also plenty of templates to choose from.
But you run into the same issues if you want to add or remove something. And these tools can’t calculate the amounts on their own.
Here are some Canva invoice templates that have a good layout:
It’s not much of a hassle if you use the same template for every client. But when you need a slightly different template it would be much easier if you can simply toggle a field on or off and have the tool calculate everything.
There are also issues when different items have different tax or discount amounts, as most templates lump them together.
You will also run into annoying little things such as duplicating and renaming original files; copying or re-typing customer’s and your info.
Tracking invoices can also be a hassle if you are bad at organising files.
Dealing with these issues ourselves we decided to make an invoice generator to simplify the process of making an invoice while maintaining a professional & stylish appearance.
And if you like it, you can create an account to get access to additional benefits such as saving customers and your info to avoid manual entry and to keep track of created invoices.
There are plenty more features to automate invoicing and manage expenses.
The best part? It’s totally free for three customers.
Even though you can create invoices just fine by using tools like Word, Excell, Google Docs, or Canva; using a specialized invoice maker saves so much time and energy. And when it’s free you really have nothing to lose.