How to create an invoice
Creating an invoice involves several essential steps – using a consistent template takes the pain out of this. Once mastered, templated invoicing is something you can easily tick off time and time again along the journey of running your small business.
Here’s what it entails to create an invoice:
Step 1: Create an invoice template
When it comes to designing invoices, people employ various approaches. The most important thing is to create a professional and visually appealing document that conveys key information clearly.
Here’s what designing your invoice involves:
Branding and Logo: Many individuals and businesses incorporate their branding elements into the design of their invoices. This includes placing their company logo prominently at the top of the invoice to reinforce brand identity. The use of consistent colours, fonts, and overall visual style helps create a cohesive look that aligns with the brand’s image.
Layout: A clean and organised layout is essential for easy readability. People often divide their invoices into sections, clearly delineating the information for the trader and the client.
This typically includes separate sections:
- Contact details
- Invoice number
- Invoice date
- Item / work descriptions, quantities, prices
- Subtotals, taxes, discounts
- Total amount due
A grid-based or tabular format is commonly used to present this information neatly.
Incorporating white space (or empty space) in the design can also prevent the invoice from appearing cluttered. It allows for easier scanning and improves overall readability.
Highlight important information: Highlighting due dates, payment terms, or any additional instructions in a different colour or style also helps draw attention to crucial information.
Colour scheme and typography: Carefully selecting a colour scheme and typography can enhance the visual appeal of an invoice.
Business owners often choose colours that align with their brand or opt for a professional and clean look with muted or complementary tones. For typography, legible and easy-to-read fonts are preferred. Keep things professional by maintaining a consistent font, too.
Footer: Invoices often include a professional footer that reiterates your company contact information, such as the business address, email, phone number, and website. Additionally, legal information, such as company or tax identification numbers or applicable terms and conditions, may be included in the footer.
There are numerous options available online if you don’t want to start from scratch and design something yourself, including customisable templates for various industries, so you can easily find and select one that suits your business needs.
With QuickBooks’ free invoice templates, you can create everything from pro forma invoices to tax invoices.
As long as your invoice design complies with UK regulations, you can customise your design how you like. We’ll be talking more about the required regulations further below.
Step 2: Add your business information
Start by including your business name, logo, address, website address if you run an online store or business website.
This information helps your clients identify the source of the invoice and contact you if needed.
Step 3: Include client information
Below your business details, provide the client’s name, address, and contact information. Make sure to double-check the accuracy of these details to avoid any confusion or delays in payment.
Step 4: Generate an invoice number
Assign a unique invoice number to each invoice.
Invoice numbers provide a systematic way to organise and track your invoices, and for client account departments to do the same at their end.
When each invoice is assigned with a unique number, it allows businesses to easily locate and reference specific invoices when needed. This helps streamline record-keeping, facilitates accurate bookkeeping, and simplifies the process of tracking payments and outstanding invoices.
By using invoice numbers, small businesses can maintain a clear and structured record of their financial transactions.
This makes it easier to reconcile accounts, identify discrepancies, and ensure accurate financial reporting. During audits or financial reviews, having well-organised and properly numbered invoices helps expedite the process and demonstrates professionalism and attention to detail.
You will always have a clear reference point when communicating with customers or clients regarding specific invoices when they are numbered.
It enables both parties to quickly and accurately refer to a particular transaction, eliminating confusion and ensuring smooth communication. This is particularly helpful when discussing payment status, resolving disputes, or addressing any inquiries related to a specific invoice.
Even small businesses deal with a high volume of invoices at times. Assigning unique invoice numbers helps streamline the invoicing process and improves overall efficiency.
It reduces the likelihood of duplicate or missing invoices, ensuring that every transaction is properly accounted for.
The use of invoice numbers also simplifies data entry and retrieval, saving time and effort in managing financial records.
Step 5: Specify invoice date and due date
Clearly state the invoice date, which indicates when the invoice was issued. Additionally, mention the due date, allowing your clients to know when payment is expected. It is advisable to set reasonable payment terms to maintain a healthy cash flow.
Step 6: Itemise products or services
List each product or service provided, along with a description and individual cost.
Include the quantity, rate, and any applicable taxes. Subtotal the items and provide the total amount due.
Your invoice should provide a clear breakdown of the goods or services exchanged and the associated costs, as this level of detail will help both the buyer and the seller to have a clear understanding of the transaction.
This (combined with the above step of having a clear due date for your customers), is arguably the most important point of your invoice – because this information can serve as a valuable tool in resolving disputes that may arise between parties involved in a transaction.
If there is a disagreement regarding the quantity, quality, or pricing of the goods or services provided, the invoice acts as evidence to support one party’s claims.
The detailed information on the invoice, including the description of the items, quantities, and agreed-upon prices, can help resolve disputes more efficiently and fairly.
Step 7: Outline payment methods
Specify the accepted payment methods, such as bank transfers, checks, or online payment platforms, and include relevant account details or instructions for the customer’s ease of payment.
These could include:
Accepted payment methods: Clearly state the payment methods that you accept, such as bank transfers, checks, or online payment platforms. This information ensures that the buyer knows which options are available for making payment.
By specifying the accepted payment methods upfront, you help streamline the payment process and minimise confusion.
Bank transfers: If you accept bank transfers, include your bank’s name, the account holder’s name, the account number, and the routing number (if applicable).
Providing this information enables the buyer to initiate a direct bank transfer easily. You may also want to mention any specific instructions, such as including the invoice number as a reference in the transfer description.
Cheques: If you accept payment by cheque, provide clear instructions on whom the cheque should be made payable to and where it should be sent.
Include your business’s address or a designated P.O. Box for receiving cheques. Additionally, consider including any additional details that may be required, such as an invoice number or reference, on the memo line of the cheque.
Online payment platforms: if you offer online payment options, such as Zettle by PayPal, Stripe, or any other of the best pos software out there right now, mention the platforms you use and provide instructions on how to make payments through them.
Include any relevant links or payment buttons that direct the buyer to the payment page associated with your business.
QR codes or other payment links: to enhance convenience, you can generate QR codes or payment links associated with the invoice.
These can be scanned or clicked by the buyer, redirecting them to a payment page with pre-filled invoice details. This approach simplifies the payment process, especially when using mobile devices or digital wallets.
Step 8: Add additional information
If applicable, include any relevant information such as discounts, payment terms, or late payment fees. Clear communication regarding these terms ensures both you and the customer are on the same page.
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