If you’ve been thinking about opening up shop as a business owner, then something you’ll need to learn is how to take payments from buyers.
Yes, some of them will be happy to place an online order with no customer service required. However, others are going to want to talk to you to get a better understanding of what you’ll provide for them in exchange for their hard earned money.
This is where invoicing comes in.
Simply put, an invoice is a document that a seller issues to a buyer to clarify the terms of a purchase.
You can think of an invoice as a simple agreement that spells out the deliverables that will be exchanged when two parties transact.
If you’re new to business, you might think that money is the only thing that gets exchanged during a sale, but typically, that’s not the full story. There’s usually several factors that should be agreed upon, like how to make payment, where to make payment, and when to make payment, to name just a few.
Plus, many buyers will request that you send them an invoice for the simple reason that most companies use them internally for accounting purposes. Because invoices make the terms of a transaction crystal clear, they can function as a convenient reference document.
So, what is an invoice and how do you write one? Let’s dig deeper into these answers along with tips and tricks to write the perfect professional invoice.
What is an Invoice?
As mentioned above, an invoice is a document that a company sends to a buyer or client. It spells out the amount, the quantity, and the price of products or services that you have provided.
Invoices serve an important purpose not just on your end, but on the receiving end as well.
For you, an invoice helps you get paid in a timely manner by providing the client with notification that a payment is due on or by a certain date.
For the client, it helps them to keep track of expenses and when bills are due. It also lets their management (or company accountant) know what expenses are upcoming, so cash flow can be managed.
How to Write an Invoice
When writing an invoice, you can use an invoice template, but be sure to include all of the important information so there’s no confusion about where the payment is going.
The word “Invoice” at the top of the page helps recipients know that it needs their attention, so they are less likely to put it at the bottom of the pile. To make it professional, include your logo and company information, including contact information.
Next, include these logistical items:
- the invoice number
- the date created
- the due date
Then comes the most important part, which is to use line itemization to describe the services or products to be provided, as well as the quantities and the cost of each.
Clients appreciate seeing the breakdown so they know exactly what they’re getting and the price. Add the items up to include a total due.
List the payment terms and any penalties for late payment. If you have a money-back guarantee or warranty, include that information at the bottom of the invoice. Lastly, include a personal note thanking the client for their business.
If this all seems a bit overwhelming, you could consider a site like Enrollment123 to help you with invoicing, as well as overall operations.
Writing an Invoice
Now that you know what an invoice is and how to write one, you’ll have a professional, legal document to use as a binding agreement with your customers.
As mentioned, invoices are an invaluable way to keep track of sales and payments, as well as notice when a payment is overdue or missing. Of course, if you’re ever audited by the IRS, they’ll also expect to see that you have professional accounting practices in place.