How to Write an Invoice – Simple Tips
Are you a small business owner or a freelancer? If yes, then you would be aware of the invoice and why and when it is used. If you are new and have not used it before, you may be wondering with a question like “What is an invoice and how to write it?”. If so, then this article is for you. Keep reading!
Collecting the payment sometime becomes a difficult task for small businesses, individuals, and freelancers. This can affect the operations of the business and can be distracting, especially for the small businesses who don’t have dedicated accounting departments. The situation is even worse for the individual business owners and freelancers.
But the invoices can save them from this situation. Easy to understand with an easy mode of payments and regular automated follow up can make payment collection faster and less time-consuming.
What is an invoice?
An invoice is a document used to inform the customers about the items or services provided to them and the amount they owe. It also contains the information about the mode of payment and where should customers send it. There is no fixed format of the invoice, so you can have your template. But there are certain guidelines that should be followed and certain details should be included.
In this internet age, there are many online payment services like PayPal that provides easy and quick invoice creation features. There are many invoice generation software that you can use to generate invoices. In this article, we have described how can you create a template of an invoice that you can use for your services repeatedly. We have also described the best practices followed for creating an invoice.
How to make an invoice for freelance work
There are some common parts that any invoice would have regardless of the type of invoice. I.e. header, and name and address of both the parties. The rest of the content of the invoice depends on what is it being sent for and is variable. It can be the services provided or the products sold or the mix of both.
The parts of an invoice and the steps of writing them are as below:
Start with the business name.
This is the basic and most important information and should be placed at the top of the invoice letter. You can do it by using the Header feature if you are making your invoice using Microsoft word or an invoice generator. If not, you can simply type the name of your business and align it in the center at the top.
If you are an individual professional or freelancer, you can use your first name, middle initial and last name to display at the top center. The font style should be a professional one like Arial or Times New Roman for example. The name should be in bigger font size than the size to be used for the remaining parts of the invoice.
Include your business logo
On the left or the right side of the name, you can include your business logo if you have. If your business name is included in the business logo itself, you can use the logo in place of the name. Though it is not a required element of the header, if you include it, it will make a good impression on the customer.
If you are a business owner, it will be really good to have a business logo and have it included in all your business documents like letter pad, invoice, receipts etc.
Mention your contact details
In this part, you have to provide the address where you want the payment received and want to be contacted for any query. It should include your business/office address, business contact number, email address. You can use your personal phone number and email address if you don’t have them separate for your business.
These details are generally entered directly below the business name, but should be in smaller fonts, and should be centered. Write it in a readable format. To do so, it can be written in several lines instead of writing everything in one line.
Mention the contact details of the recipient
Write the contact details of the business or the person you are sending the invoice to. That should include the business name, address, contact number etc. This information should be written on the left side of the invoice letter. This is to be written below the header.
If the person you are invoicing don’t have the business name, you can mention that person’s first name and last name along with the address and contact number. If you don’t have this information or if you are creating an online invoice, you can alternatively mention the email address.
Write the invoice details
Invoice Number: This will go in the first line. You have to mention the invoice number and other details in this line. This will go on the right side, across the customer’s contact details. The invoice details should include the invoice number. It should follow the word INVOICE.
The numbering system depends on your choice, so choose the method that suits your need. It can include the simple number like 1, 2, 3 or 001, 002, 003 etc. You can also include the date, i.e. 2018-03-05. But in this case, you should include the sequence number i.e. -001. For example, 2018-03-05-001.
You can do this in whatever style you want and according to your local government rule of invoice numbering if any. Adding the number at the end if you choose to include the date will help you differentiate the invoice numbers. This is important if you are sending multiple invoices on the same day. Keep the numbering sequential to avoid the confusion later when you check them at the end of the day or month.
Invoice Date or Pay-by period: This will go in the second line and it will include the invoice date. This is required even if you have used the date in the invoice number, and it should be written on the separate line. Then mention the due date so that your customer know when it should be paid.
If you have agreed with the business on the payment period, you can mention the due date. If it is not agreed or not discussed, you should consider the industry practice for the pay-by time and should mention the time accordingly. For example, you can mention 15, 30 or 45 days when the invoice should be paid.
Specify the payment terms
This is about the payment term or the payment mode. Mention how would you like to be paid, i.e. the cash payment, by check, by credit card, by bank transfer, by PayPal or any other payment method. You should also mention if you would be charging any late fee. This is to be mentioned if it is not included in the contract or somewhere else.
Next, you should include your tax identification number if required. This information depends on your local government law. If this is applicable, you should be having your local tax identification code so that you can collect the sales tax, service tax or whatever is applicable according to the nature of your business and services.
Create a table to list the items or services
This is the main part of your invoice as it contains the details of the products or the services you have provided. If you are using a word processing software or Microsoft Word to create an invoice, you can use the table feature and list the items that you have provided to your customer. It should be clearly written so that your customer can understand.
Generally, this table can contain 5 columns. Depending on the items, they can be Services, Items, Products, Date, Hours, Quantity, Number of Units, Rate, and Subtotal.
If you have provided the services, you can list the tasks you have performed, such as article writing, photo editing, graphics creation etc. If the item is a product, you can mention accordingly, i.e. watches, curtains, shirts or whatever the customer has purchased from you.
Then mention the date when the item was provided by you. In the quantity column, you have to mention the number of units provided. In case of the hourly service, you can mention the hours worked. Then in the rate column, you should mention the rate per unit or rate per hour. And in the last column, that is the subtotal column, you have to mention the total amount per item.
You should write each item in a separate row and there should be a row for the total amount for all the services or products provided to the customer.
Write the total amount
In the final row, you should mention the total of all subtotals. After that, you can add the other charges i.e. sales tax, delivery fee, and other charges if applicable. Write a grand total of all these things and highlight or bold it to make it easily visible. You should also use GRAND TOTAL or TOTAL so that client can easily get it.
Mention additional information
At the end of the invoice, you can mention the return policy if you have provided a physical product. In order to make a good impression and a lasting relationship, you should thank your customer and show your appreciation in the last line of the invoice. You can write for example “Thank you for the business with us. We appreciate it and are always happy to serve you.”
See below link for the sample invoice suitable to your needs.