Sending invoices regularly is an important part of running a small business. An invoice is a record of items supplied or work done and the amount that is owed, sent by a service provider to a customer or client. Invoices help their recipients to understand in detail a breakdown of what they are paying for, how much is due, and when payment is expected. Sending invoices can also help you to keep track of the business’s financial standing and make things easier at tax time.
We’ll discuss what information should be included in your invoice, how to create one, and the pros and cons of using an invoice template versus software. You’ll also learn the answers to some frequently asked questions.
Create a Solid Template
When choosing an invoice template for your small business, consider your industry and specific needs when billing customers and clients. Prioritize picking a template that has a clean layout and is simple to read and understand.
You can customize your invoice by adding accents that support your brand, such as a logo, fonts, or brand coloring. Including a personalized thank you note can be a nice touch as well.
Sending out invoices promptly after the work is completed or the order is filled can help you to get paid faster. Being accommodating with how you receive payments, such as accepting credit cards, can also help speed up the payment process. Some businesses implement late fees, while others prefer to offer clients and customers incentives by giving early-payment discounts.
How To Format the Template Correctly
You should include a few essentials on every invoice to make the billing process as organized and efficient as possible. We’ll discuss the basics of how to make an invoice below.
Put Down Your Basic Information
You’ll want to include the business’s basic information, such as its name, and relevant contact details like a phone number, address, and email address. This should be clearly displayed at the top of the invoice, often in the upper lefthand corner.
Include the Client's Information
List all necessary client information such as their company’s name, address, phone number, and email address. This section is commonly headed “Bill To:” and should also be included near the top of the invoice, often underneath your business’s details.
Check with the client regarding what details about their business they want included on the invoice—they may prefer listing a specific address or business name for bookkeeping purposes.
Remember the Invoice Number
Including a specific invoice number on each invoice will make it easier to reference when following up with a client, and when it comes to bookkeeping. The first invoice a business sends out is often labeled No. 1, the next invoice is No. 2, and so on.
Include an Issuing Date
You’ll also want to include the date of the invoice—this helps clients remember when the work was done or the purchase was made. A date also identifies the start of the grace period for payment.
A key part of an invoice is clearly stating how much a client or customer owes. The total due is usually located near the bottom of the invoice, after a list that details a breakdown of charges and any applicable taxes.
Give Payment Details
When working with new customers or clients, discuss in advance how payments will be processed, and let them know about your payment terms—the grace period for payments, if you charge late fees, etc. You’ll want to list your payment terms on your invoice as well. Most businesses require payment somewhere between upon receipt of the invoice and within 90 days (sometimes called “net-90”). It’s a good idea to stick to industry standards when setting payment terms.
Make sure to triple-check your invoices before sending them to clients. Mistakes on an invoice may appear unprofessional and can cause confusion that could delay payment.
Invoice Templates vs. Software
When deciding between using an invoice template or software, consider your priorities, how often you send invoices, and your personal preferences.
A small business that sends only a few invoices every month and is looking to keep costs low may prefer to use a free invoicing template. A larger company that regularly sends invoices and has a complicated bookkeeping system might benefit more from the efficiency and tools that an invoicing software offers.
Invoice templates are easy to search for online. Popular places to find them include:
- Microsoft Word and Excel templates
- The Google Sheets invoice template in Google Docs
- Free invoice makers such as Invoice Generator
Using an invoice template can be a simpler, more cost-effective option, as many are available for free or at low cost. This also can be a good choice for business owners who don’t feel comfortable using software for their billing system.
However, invoice templates can require more work, and don’t offer the more advanced features and ability to automate your processes that software can provide.
If you do choose to use invoice templates, make sure to have backup records of all the invoices you’ve created in case of computer issues.
Invoicing software is designed with the intention of getting invoices paid as swiftly as possible. It often offers features to make the payment process easier, such as mobile access and “pay now” buttons that accept credit card or bank account payments.
Automated processes that perform tasks like generating a receipt upon payment for clients, creating automatic invoices for regular customers, or sending out invoice payment reminders can help to simplify your workload. Invoicing software can also quickly provide insights about your business, such as breakdowns of income sources, product popularity, and client payment habits.
If you’re considering using invoicing software, you’ll want to pick one that has the most relevant features for your business and make sure that you’ll use the tools often enough to justify the higher price tag. Keep in mind that there can be a learning curve when starting out with new software.
Frequently Asked Questions (FAQs)
Why would I use invoicing software?
Invoicing software can help to make the billing process easier with features such as mobile access and “pay now” options that encourage clients to pay quicker. Many invoicing software options can automate processes and provide insights into your business.
How do I create an invoice using Microsoft Word?
To create an invoice using Microsoft Word, select one of their available template options listed online. Once you’ve downloaded a template, you can fill in all necessary sections with the relevant invoice details.
How do I use Google Sheets to create templates?
If you want to create an invoice using the Google Sheets template, select the Template Gallery feature near the top right-hand corner. This will expand the page to showcase several template options. Under the Work section, click on the template titled “Invoice.”