What is an invoice?
An invoice is a factual document based on the payment terms for the products. An invoice shows that you have sold a product to someone, and now you are eligible to take the money from that individual. Some people also prefer using handwritten invoices.
Why is the invoice important?
Invoices are important for every type of business. It records all the data in hard form to keep you on the safe side. Invoices also help to track late payments easily. A few of the benefits of invoices are listed below:
- It becomes easier to receive the payments.
- All the financial details are recorded easily.
- proper record keeping to avoid unnecessary taxes.
- Authentic evidence in case of a client who refuses to have received the products or services.
- A proper document including all the details of your products and services.
- Marketing your business with a nice crafted invoice.
- the payment process is clearly mentioned.
How to create an invoice?
Invoice is a formal page designed for business purposes. If you are good at graphic design, then you can design it yourself, or you can also use invoicing software. The best option is to hire a professional and get your invoice ready, using the invoice tool to meet the needs of your business. You can also use the online templates for creating an invoice.
Types of Invoices
Few basic invoices include proposal invoices, interim invoices, recurring invoices, past due invoices, and final invoices.
1. Proposal Invoice:
It is an initial proposal made regarding the payments. The estimate of the product needed by the buyers is documented using a proposal invoice.
2. Interim Invoice
If a project is too long and divided into different product segments, the interim voice can be used because it is sent weekly or monthly.
3. Recurring Invoice
If someone is your regular customer and asks for the same products every time, then you can use the recurring invoice to go through the same documentation process time and again.
4. Past due invoices:
There are separate rules of each company regarding late payments. If your client has not paid you yet, you can use past due invoices along with the actual amount, the left out amount, and the interest put on a daily, weekly, or monthly basis.
5. Final Invoice:
This invoice is used at the end of a project. When the client needs a complete project and no more products, this invoice can be sued to make the final payment.
Basic elements of an invoice
The invoices may vary in their design and formatting, but a few elements must be there on the invoice. Those elements are:
The header is an essential element of an invoice that differentiates between different businesses or companies. It includes the following details:
- The clear logo of your company
- The name of your company
- The address of your company
- The contact details of your company like office number, fax number, and email address.
- The website details of your company
2. Client’s Details
Proper details of your client should be mentioned on the invoice like:
- Name of the client
- Address of the client
- Email ID
- Contact details
3. Invoice Details
There is a unique code assigned to each invoice to keep a proper record of all the company’s products. The invoice details include:
- The invoice number
- The total amount
- The paid amount
- The remaining balance
- Payment method (credit card payments, bank transfer or cash)
- Billing cycle
4. Breakdown of Items:
This is one of the important parts of the invoice document that involves a detailed description of the items. It usually includes the details like:
- Service provided to the client
- The exact date of the service provided
- The number of hours or days you spent for that service or the number of products you sold to the client.
- Total amount for each service or product.
- Any discount if you are offering.
- A subtotal amount to be charged from the client.
5. Terms and Conditions
Every invoice should have a column as Terms and Conditions. This can include details like:
- Refund or exchange policy.
- The interest charged for the late payments.
- Any special discounts for buying several products.
6. Thank You Note
An invoice should include a simple “Thank you” or a proper thank you note to thank your client for trusting your business or company.
How to send an invoice?
The easiest and most reliable way to send an invoice is EMAIL. You can send a PDF document of your invoice t to avoid any editing and fraud. After sending an invoice, you can call or message your client to ask if they have received the invoice or not. Moreover, there is software available that helps you schedule the invoices, and they are sent automatically, so you do not have to worry about forgetting any invoice.
What to do after sending an invoice:
It is a skill to deal with the clients in a good way. Not everyone pays in time. You should set clear rules about the payment made after the due date. Moreover, it would be best if you keep a follow-up by sending emails and reminders.
What should be included in an invoice?
1. Client and business owner details
2. Description of work
4. Payment Cycle
5. Delivery fee and delivery address