Effective invoicing plays a pivotal role in maintaining the financial health of a business, serving as a bridge between services rendered and payment received. It's not just about requesting payment but about fostering transparency, professionalism, and trust between a business and its clients.
To ensure professional billing, an effective invoice should include clear identification of both the seller and buyer, a unique invoice number, the date of issue, a detailed description of goods and services, applicable taxes, and the total amount due. These elements are not just about adhering to legal standards; they're about ensuring transparency and professionalism in your business transactions. However, knowing what to include is just the starting point, as the layout and timely follow-up strategies can significantly impact how quickly you get paid.
Identify Your Business
To ensure your invoice is not only professional but also legally compliant, start by identifying your business clearly. This includes the full legal name, physical address, and contact details such as phone number and email address. If your business is registered for tax purposes, you must also include your tax identification number or VAT number. This solidifies the legitimacy of your invoice and lays the groundwork for a strong business identity.
For instance, to achieve easy identification which is essential in what an invoice should include, use bold type for your business name and placing tax information in the footer.
Use a Unique Invoice Number
Including a unique invoice number on every invoice sent out is a key requirement. This is critical for your own financial record-keeping, tracking pending payments, and facilitating easy reference in communication with clients. Furthermore, in the case of an audit or a dispute, a unique invoice number is invaluable for quickly locating the transaction in question.
Date Your Invoice
The issue date is a critical detail to include on an invoice since it assists in both you and your client track the payment within the proper accounting period. Make sure it is prominently displayed, typically near the top of the invoice, and consider including the due date nearby to reinforce the timeline for payment.
Describe Goods or Services Provided
What should an invoice include? Certainly, an itemized list of all goods and services with their associated costs. Each line should detail the quantity and the price per unit. This not only shows transparency in your billing but also helps clients understand exactly what they’re being charged for.
Add Subtotals, Taxes, and Total Due
Specifying other charges, such as taxes, is an important aspect of what the invoice should include. On the invoice, it is essential to first state the price of each item before applying the tax, then state the value of the tax on those items, and finally specify the total amount, which includes all applicable taxes and deductions. This will ensure that your customer understands the full cost and help prevent disputes.
Example: Display sales tax as a separate line item before the final total, and include a brief explanation of its application.
Design for Readability and Branding
When creating an invoice, it's important to make sure it's easy to read and reflects your brand. Don't forget to add your company logo and colours, which will not only add visual appeal but also increase the invoice's recognition. Together, these aspects create a professional impression that accurately portrays the quality and character of your business.
Consider using InvoiceOnline to simplify your invoicing process. Our service is available directly in your browser with no registration required and offers a wide selection of professionally prepared invoicing templates. These templates will not only ensure that your invoices are easy to read, but will also be in perfect harmony with your brand's visual style.
Organize for Quick Information Retrieval
Organize your invoice to showcase all necessary details, making it easy for clients to find what they need. Most invoicing software allows for customization, which you can use to create an optimal layout. An efficient flow of information significantly contributes to the user experience and can influence the promptness of payment.
Example: Place the most crucial information, such as the total amount due and payment terms, in a clearly defined area, usually at the bottom of the invoice.
Highlight Payment Terms and Total Due
Highlighting the total due and payment terms is essential, as they are key details in what an invoice should include. Using typographical emphasis can help these details stand out.
Offer Incentives and Penalties
Finally, including incentives for early payment and penalties for late payment is a recommended practice in what an invoice should include. This not only encourages timely payments but also communicates a clear policy, which can be referenced if an invoice is overdue.
Example: A statement on the invoice could read, "Take advantage of a 2% discount by paying within 10 days. Please note that payments received after 30 days may be subject to a late fee."
