If you've launched a business and sold items or services to clients, you may have realized that at some time you'll need to give them an invoice. But how should invoices be written, and what information should they contain?
Invoices are formal requests for payment given by a company to its clients. Invoices, being legal documents, require precise information in order to be recognized as valid under most commercial. We will discuss what an invoice is, what information it should contain, and how you can simply begin making professional, compliant bills with invoicing software.
What exactly is an invoice?
Before we get into what should be contained on an invoice, let's first define what an invoice is:
An invoice is a document delivered by a seller to a customer when the buyer is ready to pay for the products or services offered. Businesses in the United States are required to keep a record of all sales and income, which might take the form of invoices and receipts. As a result, an invoice is necessary not only for a business owner to retain a complete record of their sales for accounting purposes but also for the buyer in the event of any disputes.
An invoice should include all of the sale's information, such as the items or services provided and the total amount owed.
Which purchases need an invoice?
In comparison to other nations, the United States has relatively flexible invoicing requirements. Because an invoice is not required for business-to-consumer (B2C) sales, a payment receipt may be all that is required. However, if a client (consumer) requests an invoice, you must provide one.
Invoices may be necessary for some B2B sales as well as if your company imports or exports items. Check with your state government to determine your local invoicing standards.
Invoices are also highly suggested if you offer your items online or to overseas buyers in another country.
What information is required on an invoice?
If you're selling to another company or your consumer demands an invoice, you must include certain details in order for it to be valid, such as:
- The invoice title is prominently displayed.
- Business Name
- Your Business and Your Client Information
- The date the Invoice is issued
- Payment due date
- Invoice ID number
- Product Description
- Product Quantity
- The date on which the goods/services were delivered
- Total amount due
- Thank you note
If you import or export items, you may need to specify the port of entry as well as the nation of origin using the invoice comment section for additional information. In addition, you may be required to include sales tax on your invoices. Each state and county has its own tax rates and laws, so before issuing an invoice, double-check the local requirements.
How to Write Invoice Payment Terms
Each invoice you send out should include a due date that informs the customer that the invoice must be paid by the stated date. Although adding extra payment conditions to your invoices isn't required, it does assist your consumer to understand when the payment is due and how to pay the rest. This might also help you get paid faster.
It is up to your company to decide how you want to be paid when payments are due, and if you will impose late penalties for late payments. In the United States, the amount you may charge as late fees is controlled at the state level, so be sure you are not over the maximum.
Here are some examples of payment terms codes:
- NET 15 - Payment within 15 days of the invoice date
- NET 30 - Payment within 30 days of the invoice date
- NET 45 - Payment within 45 days of the invoice date
- NET 60 - Payment within 60 days of the invoice date
- COD - Cash on delivery
There are several codes that may be used as payment terms. To minimize any confusion with your consumers, it may be best to explicitly indicate the due date and how to make the payment.
An invoice prepared with Blinksale Invoicing is shown below. The cloud-based digital invoicing platform guarantees that all legally essential information is being displayed.
What is the process for creating an invoice?
While some firms prefer to handwrite bills and mail them, most prefer to utilize a cloud-based system to speed up the process and keep organized. If you're just starting out, Word and Excel are fantastic apps for simply creating invoices. These applications, however, were not expressly built for preparing bills, allowing space for error.
Digital Invoicing, on the other hand, is primarily built for making invoices. This means that all local legal requirements will be incorporated for you automatically, and you may email the invoice to your customer directly from the program.
Blinksale allows you to make a professional invoicing system. Creating and sending an invoice to a client takes less than a minute. Payment links are also immediately added to your invoices, allowing your clients to pay promptly and securely online.
Do's and Don'ts of Invoicing
Here are a few invoice dos and don'ts to help you get started with confidence.
Handwritten invoices: Handwritten invoices are untidy, easy to misplace, and make you appear unprofessional in the eyes of your clients. Instead, use a template or invoicing cloud-based software to make digital invoices.
Use perplexing payment terms: Client questions might cause payment delays. Use basic phrases, and brief but clear descriptions, and make yourself ready to answer any customer queries before and during the task.
Limit your payment options: Customers anticipate various payment options. If you limit their payment alternatives, they may select another company.
Be courteous: Requesting money might be awkward. If you do it respectfully, they will be more inclined to accept your offer with a grin.
Submit it as soon as possible: The optimum time to send an invoice is as soon as the task is finished. The more you delay, the longer it may take the client to pay.
Send the invoice in PDF format: Avoid sending invoices in Excel or Word format since clients may easily change them. Instead, provide the invoice in PDF format, which is widely accepted and cannot be changed by anybody other than you. It also appears more professional.
Use an invoicing method that everyone on your team understands: Whether you work with an office administrator or a team of field techs, make sure everyone is on the same page. To minimize mistakes, double billing, or invoices falling through the gaps, use a consistent template and invoice procedure.