Tips for proper online invoice creation

An invoice is a document the buyer issues a seller to indicate the price for goods sold. The document becomes legally binding if it includes terms of the payment, names of the parties, and cost of the goods. An invoice’s purpose is to ensure you receive payments on time, as timely transactions are critical to avoiding unnecessary delays. 

According to some statistics, the chances of getting paid increase by 40% the faster the invoice reaches your customer. Therefore, the document should be labeled clearly with the correct information. An invoice also serves as a record for accounting and tax purposes. The document should have clearly marked dates to show when payments are due and can be useful during a tax audit. 

There are six types of invoices you can create. The ideal type will depend upon your business and the circumstances. They include:

• Interim Invoice: An interim invoice breaks down the payments into multiple bills. Businesses may send interim invoices on a monthly or quarterly basis. Interim invoices are used to manage cash flow when working on larger projects. 
• Past-Due Invoice: A past due invoice is sent when the customer has not completed the payment or has defaulted. Late payments can lead to cash flow problems for your business. Therefore, the past-due invoice should be sent as soon as the due date has passed. It must include all the necessary information, including when the payment was due. 
• Credit Memo: A credit memo is a document issued when there is a discrepancy in the payment of goods and services. A business may send a credit memo when the goods supplied by the vendor do not match the purchase order.
• Proforma Invoice: A proforma invoice is not considered to be an actual invoice. It is not a demand for payment and is not part of account payable or account receivable. It’s similar to a quote or an estimate.  
• Final Invoice: You may send a final invoice after completing the delivery of goods and services. It includes a list of products or services and includes the total cost, due date, and payment terms. It differs from the pro forma invoice in that it is a demand for payment after meeting the terms of the purchase order.
• Recurring Invoice: A recurring invoice is a bill issued to a client for products or services delivered on an ongoing basis. If a client orders three products weekly, you can create a recurring invoice for those items. The invoice can also be sent on a monthly or quarterly basis depending on the agreement.

An invoice includes the basic details of goods delivered or the completed project. The information must be presented in a way that is easy for the client to understand. The following are the principal elements of a typical invoice:

• Header: The document header may have the company logo and the word ‘invoice.’ In some jurisdictions, the term invoice must be included for the invoice to be legally binding. The client’s information is usually on the top-right side of the invoice, and the details of your business are on the opposite side.  
• Date of Invoice Creation: Include the date so that the client knows when the invoice was created. Dates are critical for accounting and reference purposes.
• Invoice Number: The invoice will also include a unique invoice identifier, useful for internal audits, and customer reference. 
• Customer Name and Address: The name and address of the client confirm the document is meant for them. Otherwise, they may flag the invoice, leading to a delay in payment.
• Seller’s Business Name and Address: The business name and address indicate to the client the invoice is from your business.
• Line Items: A listing of the products and services (flat fees, hours worked, etc.) sold to the customer. 
• Payment Terms: The invoice should clearly state the terms of the service, including the due date and penalties for delayed payment. These are critical elements of the invoice required for the document to be legally binding.
• •Cost of Goods Sold: Cost of goods sold includes the price of individual units.
• Tax Rates: Ensure you include the correct tax rate to avoid delays.
• Footnotes: You can add a personalized note to the client at the bottom of the document.

To find out how you can streamline your invoicing process, contact the Quadient team today!