Whether you’re an independent contractor or a small business owner that specializes in selling services and equipment, odds are that you will need to know how to create an invoice to outline services rendered and payments due. Invoices act as a form of business transparency and instill a sense of confidence in the buyer. When a company they regularly purchase services from sends an invoice with a breakdown of activities performed and the costs associated, consumers can be assured about what they’re being charged for and how they can pay the balance.
Invoice formatting best practices
Formatting an invoice on a document is straightforward, much like a business letterhead. The main structure of the invoice should clearly indicate who is billing whom, how the recipient can contact you for questions or payment submissions, and how to identify this bill from others if they regularly do business with you.
Indicate document purpose
Clearly specify that this is an invoice for the collection of an outstanding balance for services rendered. To get money as quickly as possible, ensure the recipient knows this isn’t for recordkeeping and requires immediate payment.
Your company information
Include your logo and company information at the top to clearly signify who is sending the invoice, along with relevant information needed to contact you should the recipient have questions. This includes phone number, website address, physical address and email.
Specify the billing information of the buyer to indicate who is expected to pay the invoice amount.
Include additional reference information for proper bill tracking, such as an invoice number and date of billing.
Indicate the full amount of the bill, along with tax and additional line item information.
Tell buyers what methods they can use to pay outstanding balances and whether you’ll accept partial payments. Indicate when full payment is expected, such as 30 days after the original billing date.
Specifying payment total and terms
The entire purpose of the invoice is to identify the cost of services and how the recipient can pay the balance. Invoices should break down the entire cost of a bill into line items, or the individual services or product purchases that make up the final cost. Each line item indicates the service performed or product purchased and then lists the cost associated with it. At the bottom of the invoice is the payment total, which sums up the costs of each individual line item, along with tax.
In addition to indicating the service rendered and the cost associated, some invoices also include additional information, such as the date services were performed, hours spent on the job, and hourly or per item cost influencing the total line item cost.
If you charge for services by the hour, indicate the hourly rate and then multiply it against the total hours spent performing the service. Selling items would work in a similar fashion, though with a per item cost.
For example, a lawn care company would invoice a commercial property for the cost of ongoing lawn care. Instead of simply stating the flat fee of $250 per visit, they’d also break down that cost to indicate that mowing took eight hours of work at $20 an hour, for a total of $200. In addition, five pounds of fertilizer was applied to the lawn at a cost of $10 per pound for a total of $50. The final total then equals $250.
Invoices also include a statement above or below the payment total indicating what forms of payment are acceptable. Identify the acceptable forms of payment and provide information on how to pay for each method. Some invoices include a removable section at the bottom or top of the document where credit card information can be written on the paper and mailed back to the vendor for the charge.
Creating an invoice from scratch is time-consuming and may not look as professional as you’d like. Rather than creating your own invoice, many templates exist online for free download. After obtaining a template, enter data where specified to create a fully finished invoice. Microsoft Office’s website contains many free invoice templates with a wide range of layouts and designs to appeal to most any company. Templates can also be found on Google Docs and Open Office.
If working off a template is still too time-consuming or your company processes numerous invoices in a given day, billing and invoicing software proves a more cost- and time-efficient solution. These applications create professional invoices in large quantities and also allow for email invoicing, automatic billing, partial payments, recurring transactions and credit card processing. Software that supports each of these functionalities includes BillQuick, kBilling and Quicken Home and Business.