How to Prepare the Perfect Invoice

How to Write the Perfect Invoice

It’s easy to overlook the humble invoice, but spend a little more time and effort on getting them right, and they can have a significant positive impact on your business. There are certain principles you can use when preparing an invoice that will help increase your chances of getting paid quickly and maximize your cash flow.

We’ll guide you through all the essential steps for writing the perfect invoice, using industry best practice, so both you and your customers can benefit.

1. Start by Getting Your Company and Contact Details Right

The person or organization that you’re invoicing might get dozens or hundreds of invoices each month. That’s why it’s vital you show exactly where the invoice is coming from by making sure your company information is clear, straightforward, and visible.

  • Include the full, legal name of your business.
  • Add an address where your customer can write to your accounts receivable department.
  • Add other ways they can get in touch, for example, a direct phone number or email.
  • Consider if you want to include additional information like your website address.
  • Optionally, add your company logo if you have space.

2. Tailor the Invoice to Your Customer

Include all the relevant information to get your invoice to the right place as soon as possible, as this can significantly speed up payments.

  • Include the name of the organization or individual you’re sending the invoice to.
  • Add the address of the person or organization.
  • If you have a specific contact within the customer’s organization that’s not already shown, be sure to include their name.
  • If you have a purchase order or a similar reference from your customer, include it in the invoice.

3. Include Important Invoice Reference Information

Here’s a list of other critical information you will need to add.

  • Add the date to the invoice, ideally the same date that you’re sending the invoice out. 
  • Include a unique invoice number that makes it easy for you (and your client) to identify.
  • Let the customer know when you expect the invoice to be paid.

4. Add Precise Details of the Goods and Services You’re Invoicing For

One of the biggest issues that clients have with paying invoices is not understanding exactly what they’re being charged for. Avoid this issue by including the necessary product and service details. 

  • Include each distinct product or service on its own, separate line.
  • Ensure that each product or service has an appropriate description, so it’s easy to understand.
  • Use the appropriate “units” for each product, whether that’s the quantity delivered, hours spent, or something else.
  • Include the price per item and the overall price.
  • If you previously provided a quote or estimate, include it as a reference.
  • Show a grand total on the invoice.

5. Include Additional Discounts or Costs

Most of the time, you’ll also need to include additional fees or discounts on the invoice. 

  • Show any sales and use tax or other taxes that you’re required to charge.
  • If you need to charge for postage and shipping, add it as a separate fee.
  • If you are providing discounts, show them against each item or on the invoice as a whole.
  • Show any expenses that you’ve incurred and are charging to the customer. 
  • Show any invoice credits or prepayments that the customer has made.

6. Add Payment Details to Make it Easy to Settle Your Invoice

You need to make it simple and fast for your customers to settle your invoice. That means including the right options for payment.

  • Bank account details: The routing number and account number for your business bank account.
  • International account details: Your International Bank Account Number (IBAN) or SWIFT code.
  • Credit and debit card payments: Your Stripe, PayPal, or other online payment options for cards.
  • Checks: Who to make checks payable to and where to send them.

7. Include Terms and Conditions for Payment and Any Other Necessary Areas

Your customer needs to know the payment terms they’re expected to meet, so you should ensure everything is listed in a clear and understandable way.

  • Add details of the payment terms that you’re applying—whether the invoice is due immediately, or you’re applying 30-day terms or something else.  
  • Depending on the time you’re allowing for payment, state when the invoice should be paid by.
  • If you provide discounts or incentives for paying early, show these clearly on the invoice.
  • If there are any other special terms and conditions related to the customer, the goods and services you’re offering, or anything else, show them on the invoice. 

8. Other Advice for How to Prepare an Invoice

The seven steps above will help you create invoices that get you paid sooner. If you want to make invoicing quicker and easier, here’s some more helpful advice on getting it right.

  • Use an invoicing software solution like Zoho or Bonsai to make it faster and easier to raise and track invoices and payments.
  • Integrate your invoicing software with an online accounting package like QuickBooks or Xero so you can track your business finances in one place. 
  • Create templates for your invoices that let you provide all the information that you and your customers need.
  • Avoid any confusing terms, obscure language, or industry jargon in your invoices, so they’re easy to understand.
  • If you send out invoices electronically, include hyperlinks in the covering email to payment portals and useful information.

Creating the perfect invoice just takes a little practice. Follow these steps and soon you’ll be sending out invoices that tell your customers what they need to know, and help increase your chances of getting paid faster.

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