Invoices

• What is an invoice?
• An invoice sample with mandatory and optional fields
• Types of invoices
• Invoicing tools

• What is an invoice?

  An invoice is an official document that a company sends to its customer when it sells products or offers services. The invoice indicates exactly what product has been sold, or what service has been offered and for how much. It can be seen as a request for payment and includes payment details so that the customer can pay the company. A good invoice needs to be precise and free from any unnecessary additions.

• An invoice sample with mandatory and optional fields:

  
  

  There are the requirements for a standard, well-formed invoice:

  TITLE – “INVOICE”

  The invoice title should clearly state that it is an invoice as it allows the client to instantly see what they are receiving and how they can handle it.

  INVOICE DETAILS

  These are the details/sections a proper invoice should have:

  • Invoice number: It helps in tracking the invoice as well as keeping your financial records in order.
  • Invoice date: The date that the invoice was created and sent.
  • Description of products or services provided: The description should be explicitly stated and clearly written. It should also be as brief as possible. There is no need for long drawn out service/product detailing.
  • Details of quantities of products: Fill out the correct quantity of all products supplied.
  • Unit prices: Specify the amounts clearly. To minimise the risk of differences due to rounding, it is recommended that the prices should be rounded to two decimals for accounting purposes.
  • Details of any discounts given: Specify the precise discount given and which products or services had been discounted.
  • Subtotal / Net price: The total amount of all services or goods offered minus tax. This is also the amount you apply the tax rates to.
  • The tax rate/rates applied: Tax varies from product to product. Ensure that you're up to date with the current tax rates.
  • The total amount of tax charged: Calculate the total value of the tax rates and specify it clearly.
  • The total / Gross amount of the invoice: The sum total of all the products or services offered plus tax rates. This is the definitive amount the client will pay. Make sure that it is correct in order to avoid any delayed payments.
  • Company name: Your business name.
  • Company business address: Your business address.
  • Company registration number: The number assigned to your company when it was registered.
  • Company TAX number: This is necessary for taxation purposes. The requirement is omitted if your company does not have TAX number and does not pay TAX.
  • Client’s company name: Your client's business name.
  • Client’s company address: Your client's business address (billing / shipping address).
  • Client’s company registration number: Ensure that you fill in the correct business registration number.
  • Client's TAX number: For taxation purposes, your client’s TAX number must be on the invoice. The requirement is omitted if the company does not have TAX number.
  • Currency: A necessary addition to the invoice to ensure no financially related confusion ensues.

  OPTIONAL FIELDS

  These sections or details can be added or left out depending on your preference:

  • Logo: The business logo on an invoice.
  • Due date: The date the total payment is due.
  • Late fee: A late fee is charged to the customer when they fail to pay an invoice or make payment by the agreed date.
  • Payment details: Your company’s bank details or any other payment option you prefer. For example, Bank name, IBAN, SWIFT/BIC or PayPal or cash.
  • Email address: Your official business email address.
  • Phone number: The official phone number of your business.
  • Payment reference number: Helps to track payments.
  • Customer number: The numbers that are assigned to track business activities with your customers.
  • Notes: An extra information for the customer provided by seller.
  • Footer message: A short message for the customer at the very bottom section of the invoice.
  • Disclaimer: A legal message that is written and included in the invoice.
  • Order number: A unique number assigned to each order when it is placed.
  • Delivery date: The date when products were delivered (or services were performed) to the customer.
  • Seller’s contact: The contact details of the seller.
  • Customer’s contact: The contact details of the person to whom the seller is to contact.

• Types of invoices:

  • Standard Invoice: standard invoice issued by a TAX payer
  • Invoice for TAX non-payer: standard invoice issued by a TAX non-payer company
  • Proforma invoice: simple request for payment
  • Credit note: refunding a customer
  • Recurring invoice: automatic invoicing a subscribing customer
  • E-invoice: generated, dispatched and collected in a reusable electronic and standard layout
  • Price quote: price offer of a fixed price for specific goods or services
  • Debit note: requesting a refund from a vendor
  
  
  • Sales invoice: outgoing invoice to a customer
  • Purchase invoice: incoming invoice from a vendor
  • Supplier invoice: supplier sends a formal payment request to the customer
  • Vendor invoice: generated by the vendor
  • Self-billing invoice: the buyer prepares and sends an invoice to the seller
  
  
  • Advance invoice: customer is required to pay before goods are delivered or services performed
  • Progress invoice: for the completed percentage of the work on the project
  • Prepayment invoice: request a prepayment from the customer
  • Partial payment invoice: a partial payment for a specific products or services
  • Deposit invoice: request a deposit from the customer
  • Retainer invoice: payment request for a retainer fee
  • Interim invoice: request for payment for work completed that is sent to the customer before the completion of the large project
  • Final invoice: the project has been completed or the goods and services have been supplied to the customer
  
  
  • Paper invoice: printed invoices
  • Paperless invoice: created and sent in electronic format without printing on paper
  
  
  • Incorrect invoice: an invoice with an error
  • Duplicate invoice: two invoices are generated for a single delivery
  • Overpaid invoice: the customer has paid an excess amount
  • Underpaid invoice: the customer does not make full payment
  • Overdue invoice: customer fails to make payment by the due date
  • Void invoice: makes an impact of zero on the accounting record
  
  
  • PEPPOL invoice: an electronic invoice via the PEPPOL network
  • EDI invoice: an electronic invoice in an EDI standardized format
  • cXML invoice: electronic invoicing in cXML format
  
  
  • Branded invoice: reflects branding elements: logo, theme, design, fonts, colors
  • Invoice with a discount: contains a discount, which reduces the amount payable
  • Invoice with bank details: payment request through a bank transfer
  • Crypto invoice: the payment is requested in cryptocurrencies
  • Paid invoice: an invoice that has already been paid by the customer
  • Timesheet invoice: summarizes the hours worked on a specific project
  • Freight invoice: an invoice for the transportation of the goods
  • Batch invoice: multiple invoices are processed together in a single batch
  • Intercompany invoice: sales transactions between two units or subsidiaries or divisions of the same parent company

• Invoicing tools:

  • Simple invoice software
  • 38 Free invoice templates - Word, Excel, PDF, Google docs/sheets
  • PDF invoice generator [free]

Additional Invoicing Tips:

Whenever you send an invoice notification email to a customer, it is advisable to add a simple, “thank you” at the end. This shows politeness and professional friendliness. Just these two simple words makes an impression that you care about your client and that you would like to have a continuous and long term business relationship with them, which will definitely help with the growth of your business.

Ensure that every detail on the invoice is correct before you send it to your customer. This will prevent any hassle on your customer’s part, as they would not want to waste time having to contact your company and requesting any changes to your invoices. It is not seen as very professional if you have any mistakes on your invoices and could even lead to frayed relationships with your clients which could impact and hinder your business. In addition, having the wrong information on an invoice may lead to delayed payments for your goods or services.