How to Create an Invoice

What is an invoice?

An invoice is an itemized document listing and detailing the prices of all products and services a client has purchased from your company during a given period. Once your client receives your invoice, they must pay the invoice within the period specified in your terms and conditions.

Without invoices, small businesses like yours would likely have a far tougher time pursuing client payments and receiving them on time. Invoices also double as records of your work for a client, and this record can be useful for accounting purposes, renegotiating terms with a client or even if you’re facing an IRS audit. Your clients can likewise use invoices for recordkeeping and accounting.

What is included on an invoice?

You should include the following in your invoices:

• The date of the invoice
• The name, address, phone number and email address of both your company and your client
• A unique invoice number or identifier
• Payment terms such as net 30 or a specific payment deadline
• An itemized list with a unit price, quantity and total price for each item
• A clearly started total invoice value

How to create an invoice

It’s one thing to know what you should include in your invoice, but it’s another to present this information in a manner that your clients can easily understand and act upon. You can make sure your invoice is fully comprehensible by taking the following steps:

1. Add a header

Your invoice should begin with a header that includes the invoice date alongside contact information for both your company and your client. Often, your business information will be on the left-hand side and that of your client will be on the right-hand side, but sometimes, your information can go atop your client’s.

2. Designate an invoice number or identifier

If the invoice you’re sending is your first for a client, you can include “Invoice #0001” in your header (the extra zeros in the number prevent spacing changes if you reach thousands of invoices). Alternatively, you can set an identifier related to the service period, such as “Invoice #2021Q1” or “Invoice #FEB2021.” Even if your invoice identifier specifies the period that your invoice covers, you should include an exact invoice date alongside the identifier as well.

[Related: Learning What an Expense Report is to Understand Your Business’s Financial Status]

3. Insert your itemized table

The core of your invoice is your itemized table of services and prices. Here, you’ll list each item and its quantity, rate per unit (which can be a price per item or an hourly rate) and total cost. At the bottom right of the table, you’ll add each line item’s cost and record the sum as your invoice’s total value. You should either make sure this number is bolded or list it elsewhere as the total due in a large, obvious font. In some cases, you’ll need to charge taxes as well.

In your itemized table, you can also include the date or timeframe in which each line item was provided and detail what the indicated service encompasses. Doing so can help make your work and pricing more transparent to your client and possibly encourage faster payment. You can also facilitate payment by including more than one itemized table. For example, if you are providing services to your client both within their office and off-site, you can create one itemized table for each location.

4. Add footnotes

Often, invoices are self-explanatory lists of services, quantities and prices, but sometimes, they can’t tell the whole picture. For example, it might not be immediately evident that you’re applying a discount to one of your line items. To clarify this discount, add an explanatory footnote at the bottom of your invoice. This way, your client knows that future invoices may display higher rates for the same work. If your invoice doesn’t require clarifying footnotes, you can still add a thank-you note – a little gratitude can go a long way.

Sample invoice

Now that you know how invoices work, it may be helpful to see one in action. That’s why we’ve provided an example below:

February 26, 2020                                                                        INVOICE #FEB2021

John Doe                                                                           Bill To: Excellent Client, LLC

1 Times Square                                                                           1 Hollywood Boulevard

New York, NY 10011                                                                  Los Angeles, CA 90045

1-800-111-2345                                                                                     1-800-999-8765

john@MyCompany.com                                                                  client@myclient.com

INVOICE

Notes:

* As previously discussed, we will no longer be offering service 3 starting next month.

^ For service 6, a discount of $50 per unit was applied. Thank you as always for choosing MyCompany!

Invoice templates and generators

Now that you know how to create an invoice and have seen a realistic example of one, you can start making your own using a template or generator. Below are five options:

• Invoice Home offers 100 different invoice templates ranging from standard designs to options with more eye-catching appearances.
• Invoice Simple offers three invoice templates that you can download as Word, Excel or other customizable files.
• Speaking of Word and Excel, Microsoft offers dozens of its own downloadable templates for both programs.
• FreshBooks offers several templates in Word, Excel, PDF or G Suite options.
• Canva offers hundreds of extensively customizable invoice templates that balance clear information with modern designs.

Once you’ve chosen your template, just follow the above steps to create invoices that clients won’t just understand, but will also act upon.