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How to make an invoice | 7 simple steps to create the perfect invoice

How to make an invoice | 7 simple steps to create the perfect invoice

If you're a small business, you know the importance of invoicing. It's one of the most important ways to get paid for the work that you do. But sometimes, knowing how to create an invoice perfectly can be tricky.

Mastering how to do an invoice doesn't have to be difficult, but it is critical to your business' success. When your invoices are correct, it helps you get paid faster.

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Sending accurate, detailed invoices also helps you avoid any misunderstandings or invoice disputes with your clients by giving them all the information they need.

That's why we've put together this blog post, which will give you seven simple tips for how to write an invoice that gets the job done!

What is an invoice?

An invoice is a document that records the provision of goods or services and requests for payment. It's important to include all the relevant information on your invoices so that your clients know what they're paying for, and when they need to pay it.

Generally, an invoice contains the following information:

  • The name and contact details of the business or individual that is providing the goods or services
  • A description of the goods or services that have been provided
  • The date on which the invoice was issued
  • The date by which payment is due and your businesspayment terms including your late payment fee policy
  • The amount that is owed
  • Any applicable taxes
  • Any discounts that have been applied
  • The total amount that is owed

If you're not sure where to start, we've put together a simple guide on how to make an invoice. Just follow these seven steps and you'll be up and running in no time.

1. Create an invoice number 

Your first step in how to make an invoice is to create an invoice number. This should be a unique number that identifies this specific invoice that should be clearly displayed on each invoice.

There are a number of ways to create unique invoice numbers. Some businesses use a simple numbering system, starting at one and incrementing the number by one for each new invoice.

Others use a more complex system that includes the date or year, or both. For example, you could use "2022-001" to indicate the first invoice of 2022.

Another option is to create a unique customer and append that to the invoice number. So, if your first customer is "ACME Corp," you could use "ACME-001" as the first invoice number.

Creating a unique invoice number serves two purposes. First, it ensures that each invoice can be identified and tracked separately from other invoices. Second, it makes it easier to search for a specific invoice.

2. Make the invoice look professional

Your invoice is a reflection of your business, so take some time to make it look professional.

Use a clean, simple design and layout. Include your company name and logo. If you don't have a logo, use a professional-looking font for your company name.

Make sure the invoice is easy to read. Use clear headings and white space to break up the text.

Remember that every interaction with your customer is a chance to make a good impression.

3. Add your and your customers’ business information

As we've already mentioned, when it comes to how to create an invoice, making sure that your customer has all the required information is crucial.

That means your business name, address, email and phone number as well as the customer's name, address and purchase date should all be included.

If you're going to include a logo, put it at the top of the invoice so that it's one of the first things your customer sees.

4. Make the invoice detailed

While we've already said that your invoice should be clear and easy to read, but that doesn't mean it shouldn't be detailed.

In fact, the more information you include, the better.

As well as the customer's name and address, make sure to include a detailed description of what they're being charged for, when the invoice is due and how they can pay.

If there are any special terms or conditions that apply, such as prompt payment discounts or payment installment plans, now is the time to mention them.

While you do want your invoice to be concise, missing out critical details can slow down the payment process and put you at risk of invoice disputes or non-payment.

5. Include issue and due dates

It's always a good idea to discuss the due date with your customer in advance and have your expected payment window listed in your payment terms and conditions.

Including the issue and due dates on your invoice is a helpful way to ensure both you and your customer are on the same page.

This also allows your customer to better budget for when they need to make the payment and can head off potential payment issues before they arise.

6. Calculate the total invoice amount

When it comes to how to write an invoice, the most important section is the total amount owed.

This is calculated by adding up the cost of all the products or services you are providing, including any taxes and fees.

If you're using invoicing software, this section will be automatically generated for you. If you're creating your invoice manually, be sure to double-check your math!

You'll also want to make sure you include any ancillary costs as well, such as:

7. State your payment terms

Your payment terms should be stated clearly on the invoice, including when payment is due and any penalties for late payment.

If you're using invoicing software, you can usually include a "Payment Terms" section that will automatically populate this information for you.

Be clear about when you expect to receive payment, and include any relevant information such as discounts for early payment.

You should also specify the consequences of late payment, such as charging interest, enforcing credit limits, or refusing to provide further services, by ensuring that you include your late payment fees policy.

It's also a good idea to include a list of accepted payment methods, such as credit card, direct deposit, Stripe, or PayPal for example.

If you think your customer might have trouble paying for a large invoice in one payment, you can make payment plan options available. This can help you get paid faster and avoid having to chase up payments.

How to send an invoice

The most common way to send an invoice is via email and studies show that 80% of invoices are paid via email chasing alone, so this should be your first port of call.

While in theory, a single well-written invoice should result in your getting paid on or before the due date, the reality is that invoices often need to be chased.

The good news is, technology is making it easier and more seamless for customers to make payments, many businesses are adopting customer payment portals which they can link customers to within invoices, via email, or even via SMS payment reminders.

Within these payment portals, customers can pay your invoice instantly through their chosen payment method. Coupled with email and SMS payment reminders, this process can automate a lot of the work involved in getting paid on time, and let customers pay you instantly from their phone in just a few clicks.

How to make an invoice the right way!

While learning how to write an invoice might seem complicated, you're only seven steps away from sending the perfect invoice:

  1. Create an invoice number - This will be your reference for tracking payments and communicating with your customer about the status of their invoice.
  2. Make the invoice look professional - This document is a reflection of your business, so take the time to make it look presentable. Use your company logo, color scheme, and contact information. Consider adding a footer with your legal business name, address, and payment terms.
  3. Add yours and your customers’ business information - The top of your invoice should include your business name and contact information, as well as your customer’s name and contact information.

You can also add your customer’s purchase order number here to make it easy for them to reference the invoice.

  1. Make the invoice detailed - Include a description of what the customer is being charged for, when the service was provided, and how much they owe.

If you’re providing a service, be sure to include enough detail so that the customer knows what they’re paying for.

  1. Include issue and due dates - Include the date that the invoice was issued, as well as when payment is due. This will ensure that both you and your customer are clear about when payment needs to be made.
  2. Calculate the total invoice amount - Be sure to double-check your math! Once you’ve calculated the total amount due, include that number on the invoice.

If you’re including taxes, be sure to note what percent you’re charging and include the tax amount in the total. Most importantly, make sure that the totals match up between the body of your invoice and the bottom line.

  1. State your payment terms - In order to avoid any confusion, be sure to state your payment terms clearly. Will you charge a late fee if payment is not received by a certain date? Are you offering a discount for early payment? Be clear about what you expect from your customer in terms of timeliness and method of payment.

Making an invoice effectively can reduce invoice disputes, improve efficiency and help your business get paid faster. Best practice invoice creation gives you the best chance of achieving KPIs in your accounts receivables team.

If you are looking to drive efficiencies in your accounts receivables team, get invoices paid faster, and improve your cash flow, try Chaser’s accounts receivables automation software for free, for 14 days.

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