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What's an Invoice?

by Devra Gartenstein ; Updated March 05, 2018
Close up pen on paperwork and woman hand calculate finance.

An invoice is a communication tool that tells your customers what you've provided for them, how much it costs and how they should pay. Invoices can be as simple as a handwritten sheet with a couple of notations or they can be sophisticated, professionally designed computerized documents. Clear and informative invoices give your company credibility with your customers. They also help you to get paid sooner rather than later by letting your customers know when you expect them to remit.

Invoice Numbers

Invoices are written in succeeding order, and an invoice number helps you to locate or refer to a particular invoice in a sequence. If your invoices aren't computerized, file them in the order you issue them so you can easily find the invoice you need. If you buy pads of invoices that you fill in by hand, they'll come with preprinted numbers, and the invoices will be bound together so you don't have to do any extra work to keep them in order. If you're creating computerized invoices using software such as QuickBooks or Square, the program will do the work for you and will issue your invoices in order.

When you need to refer back to an invoice, such as if a customer has a question about payment or if you've received a check and want to mark the invoice as paid, simply search for it by invoice number. You can start your sequence of invoices with any number you choose so even if you're writing your very first invoice, you can give it a higher number to make your company appear more established.

What Should be on an Invoice?

Aside from the invoice number, an invoice should include everything you need to convey the necessary information to your customer so you can get paid. In addition to being a notification of a sum due, an invoice is also a useful reference tool for customers needing to know what they have received and in what quantity. Include on your invoice:

  1. Your company's name, address, phone number and email.
  2. The date the invoice was written or the date the product was delivered. Use one dating system or the other, but be consistent.
  3. Your customer's name and billing address.
  4. Your customer's shipping address.
  5. The quantity of each item ordered, the name or inventory number of each item ordered, the unit price of each item ordered and the total price of each item, calculated by multiplying the quantity by the unit price.
  6. The total amount due for all the items on the invoice.
  7. Sales tax due, if applicable.
  8. Payment terms, such as cash on delivery or net 15 (15 days to pay).

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Using Invoices for Speedy Payment

A bit of thought and care when creating invoices can help you get paid more quickly and consistently. The sooner you send your invoice, the sooner your customer will know how much to pay and when payment is due. Although payment terms such as length of time between delivery and payment are usually negotiated in advance, stating these terms clearly and visibly on the invoice can serve as a useful reminder. If your customer is behind on payment for previous invoices, including a total amount due on the current invoice can speed up payment by saving the customer the step of looking up previous balances due.

About the Author

Devra Gartenstein founded her first food business in 1987. In 2013 she transformed her most recent venture, a farmers market concession and catering company, into a worker-owned cooperative. She does one-on-one mentoring and consulting focused on entrepreneurship and practical business skills.

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