The invoice is a critical element to any business success. Without an effective invoicing method, the odds of getting paid on time are much lower than they should be. Getting paid, and getting paid fast, is the backbone of any successful business and invoices serve important purposes for both the sender and the recipient. For this reason, we have dedicated the following page to the purpose, key elements, and various ways of invoicing clients.

Sales Invoice Template

What is an Invoice?

An invoice is a document sent by a provider of a product or service to the purchaser. It is a written verification of the agreement between the buyer and seller of the goods or services. Invoices are an essential part of the business world, as they help accounting keep a track record of the sales transactions.

This type of document has an important purpose for both the business sending the invoice and the customer receiving it. For the company, it helps expedite the payment process by giving the clients a notification of the payment that’s due. The benefit for the client-side is that the invoices provides an organized record of an expense with itemized details, and can help with record keeping.

What is an Invoice used for?

In terms of usages, they serve businesses for a variety of purposes, including:
  • To request timely payment from clients
  • To keep track of sales
  • To track inventory, for businesses selling products
  • To forecast future sales using historical data
  • To record business revenue for tax filings

Rental Invoice Template

Elements of an Invoice

A good, legally-sound invoice should include:
  • The word "INVOICE"
  • Invoice number
  • Date of service rendered
  • Date of sending the invoice
  • Contact and name of org/seller
  • Name and contact of buyer
  • Terms and conditions
  • A line detailing each product or service
  • Cost per unit of product
  • Tax rates
  • The total amount owed with currency
  • A personalized note

How to Invoice a customer?

An invoice is prepared only after the product or service provided is shipped or delivered to the customer.Here are some useful guidelines:
  • Identify the customer - it is recommendable to assign a sub-customer or job within the file record.
  • Previous document numbers related to the sale - include any purchase order or sales agreement or estimate.
  • Identify the items sold and delivered - in the description should be listed: the name of the product or service, quantity (or time, for services) and rate (per item or per hour). If you are using online software, the total for each item is calculated. If some items are "back-ordered” they should be included in this section.
  • Applied discounts and Received deposits
  • Offer different payment methods - Credit/Debit card, Online payment methods, Pay by cash.
  • Terms for the shipped products - There are two types: FOB shipping point or FOB destination. (FOB stands for "free on board.") If the terms are FOB shipping point, the shipper (that's the seller) pays the shipping. If the terms are FOB destination, the buyer pays the shipping. It's also a good idea to note if the customer picks up the item or items.
  • Terms of sale - in this section should be highlighted the payment due date and if there is an applicable discount % for early payment.
  • Invoices may be mailed or emailed or faxed to a customer.