To learn how to create an invoice, it’s critical to know the factors to consider when invoicing, the key details to include, the terms and timeframe of payments, and the answers to frequently asked questions.
Factors To Consider When Invoicing
What you include on an invoice can depend on a few key factors, such as:
The type of clients you work with: While larger companies may require a professional, well-detailed invoice in a specified format, newer, smaller businesses may be more open to accepting a variety of invoice types. The type of work you do: The information you include on a service-based invoice can depend on the type of services you offer. For example, a lawyer’s invoice may include different items than the one a photographer will send. Billing preference: Do you bill by the hour? Or do you prefer project-based fees? A provider who charges, say, $50 an hour and works 25 hours a week will create an invoice billing the client for $50 x 25 = $1,250. Alternatively, a freelancer who charges $125 per project and completes 10 projects will bill for $125 x 10 = $1,250. The client’s preferences: Some clients insist on numbering the invoice a certain way, while others need a business address. This information may be necessary for processing payments.
What To Include on an Invoice
Having a detailed, accurate invoice is crucial for timely payments. So how can you make sure you are doing everything correctly? Here’s a handy list you can follow to ensure you have all the right details on your invoice:
Your business details: Business name, employer ID number, and contact information Client’s information: Their business name, address, and contact informationDates: When is the invoice being submitted? When is it due? Work details: Which projects are you billing for? Specify the name, type of work, time taken (if billing hourly), any reimbursement fees, etc. Amount: How much money is owed? Are you charging late fees? Payment details: How should the money be paid? Mention bank or e-payment information. Terms: What are your payment terms? For example, “a late fee of 8% is charged for every month delayed.”
Use an Invoice Template
Creating an invoice from scratch can feel challenging, especially if you are new to the process. Fortunately, there are several free invoice templates available online. Working with a template can help you minimize errors, save time, and create a presentable design. Here are some important steps you need to follow.
Find the Right Template for You
Look for invoices designed with your industry in mind. For example, if you are an accountant, look for invoice templates made for financial service providers. These may offer more suitable details and formatting features. Also, make sure your invoice is easy to read. Prioritize readability over design. A simple black-and-white template with a clear font is better than a brightly colored one with tiny letters and unnecessary, superfluous features or designs. If you are an independent contractor (freelancer) who uses service-based invoices frequently, make a list of suitable invoice templates for regular use. You can use a spreadsheet or any management app for compiling links/editable PDFs of easy-to-read, industry-relevant templates. This will reduce the time you have to spend on administrative tasks. Here are some notable options for free invoice templates:
Google Spreadsheets Microsoft Word Google Documents
You can also use free (and paid) software to generate service invoices. Here are some helpful resources to consider:
Zoho Invoice Wave Quickbooks Invoice Bus
Format Your Template Correctly
Working with a template can be challenging at times because of formatting issues, which you need to resolve to make sure the final invoice is readable and presentable. Issues you may need to address include:
Adjusting the font sizeChanging background colorsEnsuring headings are appropriately capitalizedChecking if the business logo fits well within the templateAdding or removing any relevant sections
Enter Your Information
This is where the primary work begins. Once you have found a suitable template and have correctly formatted your invoice, you can start entering your information. This will include the components mentioned earlier (business name, amount, payment details, etc.).
Include the Client’s Information
The client’s information including their business name, office address, contact information, etc., is included at the top of the invoice. Here’s an example: (Address) The XYZ Company B-201 Park Avenue New York 101010 (Contact Information) payments@thexyzcompany.com (123) 456-7890
Include the Invoice Number and Issuing Date
Make sure you include the invoice number and the issuing date on your invoice. This helps with tracking payments manually or through online payment management software. These details can also come in handy if an invoice slips through the cracks while being forwarded between departments. You can number the invoices directly in the order of issuing (001, 002, etc.) or use a specific system to help you track (101 onwards for A company, 201 onward for B company, etc.).
List Services and Payment
This is perhaps the most important section of an invoice. You get paid for the services/time/projects you list on your invoice, so make sure this section is 100% correct. Start by making a list of all the work you have completed (in the specified time period for this specific client). You can list this per project or per hour. Here are two examples. After you have listed all your services/projects/hours, include a grand total of the amount owed at the bottom of this section. Service and payment details like the ones mentioned above are listed below your and your client’s business information. They are often highlighted and appear at the center of the invoice for quick reading. Next, include payment options. This can be your bank information for deposits and wire transfers, address for check payments, e-transfer IDs or online billing info for digital payments, and any relevant details that will help your client pay on time. This information can appear at the bottom of the invoice or be discussed beforehand in a contract or an email agreement.
Discuss When the Invoice Should Be Paid
Most service providers don’t get paid the same day of sending the invoice. In many industries, like freelance writing, for example, payment depends on the hiring company’s terms. Many companies adopt a net 30 or net 60 policy in which contractors are paid within 30 or 60 days of receipt of the invoice. However, in some industries, contractors hold the right to negotiate payment terms. For example, a doctor may demand an advance payment invoice be paid before an appointment. When the invoice is paid often depends on the working relationship between the hiring company and the contractor. For instance, if you are an established professional in your industry, you may have the leverage to demand advance payments even if your peers get paid according to the company’s terms.
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