how-to backgroundHow to create an invoice?

How To Create An Invoice? 5 Simple Steps For Your Business! [Template PDF]

By Nguyen OanhPublished: 7/18/22

How to create an invoice? It is not easy to have a clear and exhaustive answer when you start a job or when you discover the company management for the first time. What are the mandatory aspects to mention? You might ask how to submit an invoice or how to send an invoice?

Don't worry, we’ll share everything you need to know to make an invoice in due form and in compliance with proper legislation.

In this article, you’ll get the definition of an invoice, its main elements, 5 simple steps to create an invoice, best practices, and a free invoice template with professional design. Maybe you’ll even find yourself an invoicing software. After that, no more worries about invoicing; you can focus on your business and your clients!

What's an invoice?

An invoice is an accounting document issued by a supplier to request payment from the buyer. It includes the number of items, the prices, the unit price, and the total amount that customers have to pay. An invoice can also be used as a legal record to justify the transaction between a client and a supplier.

What is included in the invoice?

As a legal record, an invoice has to contain these important elements:

  • the unique invoice number/code (most online invoices will auto-generate the invoice number),
  • the invoice date,
  • the name of your business,
  • the invoicing address,
  • the information of the customer (name, address, contact, department, etc.),
  • the description of purchase (quantity of items, unit price, description, total amount)
  • the total summary (total, subtotal),
  • the VAT identification number (if applicable),
  • the penalties for late payment,
  • the terms & conditions of payment.

How to create an invoice? Follow these 5 simple steps!

1. Choose the right type of invoice

The invoice is a commercial document issued in duplicate, to be provided to the customer and kept by the product or service supplier.

Several types of invoices exist. Each invoice has a specific use:

  • Standard invoice: This is the most common type of invoice that is issued by a business to its client and can fit the needs of many industries.
  • Commercial invoice: This invoice is the same as the standard invoice but it is used internationally. It includes the details of the business transaction such as the weight and the packaging of the package for the abroad sales purpose.
  • Pro forma invoice: This type of invoice includes the estimated hour and cost to complete a project. The information required doesn't have to be exact.

💡 Don't worry about going to search for it, here is a free downloadable proforma invoice template for you!

  • Debit invoice: This is used for the additional hours or amount that need to be modified on the project plan.
  • Credit invoice: This invoice is issued when a business wants to give a discount/refund or to correct an error for its clients.
  • Recurring invoice: We use recurring invoices when a client buys some products or services many times, and you have to send them the same invoice.
  • E-invoice: This is a new specific type of invoice that can be sent electronically. Nowadays, invoicing software can help you do this at a glance.

2. Respect the invoicing deadlines

The time to make an invoice comes once the sale or service is completed.

👉 For a sale of goods: the invoice is issued at the time the buyer and seller have jointly agreed on the order. In some cases, the invoice is issued at the time of delivery of the goods, which may differ from the date of the sale.

👉 For services: the invoice is issued when the service is performed. For long services, progress invoices can be issued to stagger payments, and thus the business doesn't wait until the service is completed to invoice.

3. Fill in the mandatory information

In addition to the invoice reference on the header, here are all the mandatory aspects to include:

The identity of the supplier

  • the company name or the name of the supplier,
  • the address,
  • the place of registration,
  • the VAT identification number, if applicable.

The identity of the buyer

  • the company name or the name of the buyer,
  • the address,
  • The reference to the invoice
  • the invoicing number - it must be unique,
  • the date of the invoice.

The description of goods or services invoiced

  • their price or rate,
  • the unit amount,
  • the quantity of items,
  • the date of delivery or the date of completion of the service.

The amount of the invoice

  • the total amount of the goods or services invoiced,
  • the applicable tax rate,
  • the total amount including sales tax,
  • any mentions relative to the applicability or not of other taxes or fees,
  • possible price increases or discounts,
  • the payment terms.

4. Mention payment terms

Mentioning payment terms are one of the most important elements of an invoice. It includes the details about the payment such as:

  • the due date for payment,
  • the penalties applicable in case of delay,
  • the discount conditions if it is a question of an anticipated payment

You can also meet some abbreviations such as CIA (Cash In Advance), EOM (End Of Month), Net 30, etc. so make sure that you know them!

5. Create the invoice from a template

No more paper invoices that you might miss, have to rewrite, or even lose!

The easiest way is to use an invoice template that you just have to customize to fit your company.

How do you create an invoice? Appvizer offers a free invoice template for you to download below! 👇

Free invoice template

Be professional not only in your attitude but also in the presentation of your invoice! We have prepared a free downloadable invoice template for you with a professional design. All you need to do is fill in the information and be ready to take that deal!

Free Invoice Template [PDF]

Download

How to submit an invoice?

Follow these 3 easy steps to submit an invoice!

Create and approve an invoice

After creating your invoice, you can proceed to the approval section. This process is used to check the admissibility of your invoices, so that only "approved" invoices are admitted to the following processes within your company: invoice processing in accounting and payment initiation.

The admissibility check consists of verifying whether an invoice is addressed to your company and whether it was received as a result of an order, or a contract.

Submit and view the invoice summary

Once the invoice is approved by the accounts payable representative, the supplier will receive a confirmation mail that the invoice summary is ready to be viewed. Then they will use the supplier portal website to view the invoice summary.

At this step, they can verify if there is an error or incorrect information. If so, they still can modify it and make another demand for invoice submission.

Send the invoice and process the payment

Once everything is done correctly, the supplier can send the invoice to the client. When the client receives it, they can record it in their book. At this moment, the invoice will become a bill that they have to pay.

💡 Is an invoice a bill? Discover the difference between bill and invoice!

When the payment is made, both supplier and client will receive a confirmation mail and a receipt as proof of payment.

How to send an invoice?

There are two common ways to send an invoice:

By mail

This is the traditional and the easiest way to send an invoice to your client. Use our free template and don't forget to convert it into a PDF document before sending it. Remember to mention “invoice" in the subject line and write a short message to avoid going to the spam box.

Using invoicing software

Nowadays, there is a wide range of invoicing software on the market that you can choose freely.

Whether you are a self-employed entrepreneur or a small company, invoicing software will :

  • save you time,
  • guarantee that you issue compliant invoices.

Low-cost or even free invoice software simplifies your invoicing drastically. An invoicing software not only saves you time by facilitating the processing of your invoices. It also allows you to better prepare your accounting for your accountant.

🚀 We have prepared a comparison of the best invoicing software for small business such as Square, Zoho Invoice, Wave, Brightbook, etc. check it out now!

Best practices for invoicing

Include enough information, but not too much

Above all, be simple! The invoice has to be as simple as possible with only essential information, especially the detail of the cost and the quantity.

  • The date of issue of the invoice,
  • The information of both supplier and client,
  • The unique invoice number,
  • The identity of the buyer and seller,
  • The tax rate,
  • The total amount to be paid excluding and including tax

Remember: an invoice can also be a branding tool

Did you know that your invoices can become real marketing tools?

Invoices are one of the most important financial documents for a company, and these documents are carefully read by your customers. Take advantage of this opportunity to transform it into a tool of your marketing strategy, either via the email sending the invoice or on the invoice itself.

  • At the end of your invoice, you can remind your customers of the products you sell (in order to make a cross-sell via a product each month), or offer promotions on higher-end products (upsell), special packs, and accessories…

  • You can include a message in your invoice indicating a discount for future orders if it is placed before next month to encourage customers to recommend it sooner.

  • Most billing software allows you to customize your invoice with a few clicks. These personalization options can be a way to communicate about a brand change, a company takeover, annual vacation closures, new payment methods, a new commercial policy, price changes, a move, an inauguration, a trade show… Take advantage of this opportunity to personalize your invoices, and give them a real "soul", just like other contact channels with your customers.

  • Your invoice can be used to retrieve information, for example, you can mention a contest to get emails, and contact information of people in the company.

  • If the people paying or forwarding the invoice are the end customers, you can use the invoice (sending email & mentions on the invoice) to collect customer reviews (or ask them to post a review, to like a Facebook page...) in exchange for a coupon present on the invoice.

Reduce your payment delays

While many companies still operate on a 30-day payment cycle, this is not mandatory. Some SMEs now require invoices to be paid within seven business days. And keep an eye out for customers who fail to meet payment deadlines. Controlling outstanding payments is an important part of your company, so nip any bad behavior in the bud.

Use invoice generators to optimize the process

“Using invoicing software is too expensive”

FALSE!

Good invoicing software or an invoice generator adapted to the needs of entrepreneurs exist (and are sometimes even free), and bring several advantages:

  • An invoice software helps to control the deadlines in parallel with the production. The invoice must be sent at the time of the realization of the service or at the time of the delivery of the good.

  • By automating a part of the process, software strongly limits the risks of error (involving the production of a credit note or credit invoice). It is a good way to save precious time.

  • The possibility of consulting invoices offers a valuable analytical vision. Hence the interest in using a solution capable not only of editing an invoice but also of listing and archiving it in a relevant manner.

You can check out free invoice software if you are a small business or an entrepreneur. There is a wide range of free online invoice generators with many features on the market nowadays. Some of them use Paypal, Skrill, or Google Pay as a payment transfer tool which is very convenient.

In conclusion, it’s never been easier to create an invoice if you follow our 5 simple steps: Choose the correct type of invoice, generate the invoice from a template, mention payment terms, fill in the mandatory information, and respect the invoicing deadlines. If you want to optimize the process, you can consider using invoice software.

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Free Invoice Template [PDF]

Download

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