How to write a perfect invoice to have all your accounting docs in order

How to write a perfect invoice to have all your accounting docs in order

You’ve completed the job, and only one thing stands in the way of getting paid: sending an invoice.

Thousands of invoices have come across our desk at PandaDoc, which means we know an effective invoice from a poorly constructed one by this point.

We even have a custom invoicing software of our own, so you could say we know a thing or two about invoicing.

Let’s get started and you’ll find out how to prepare an invoice, how to fill out an invoice, and finally, how to submit an invoice.

Are you new to invoicing?

If so, then listen up (if this isn’t your first invoice experience, feel free to skip ahead to the next section).

Creating an invoice is what stands between you and money in the bank. It’s a formal document that records a transaction between a buyer and seller.

Invoices typically outline the goods or services that changed hands, costs payment terms, and any other necessary information for the transaction.

Besides the gateway to receiving payment, invoices are also a critical element of accounting for internal controls and audits.

If you’re new to invoicing, then you’re in luck, because the process used to be much more labor-intensive.

Like everything else, invoicing used to be paper-based, with physical, printed invoices often sent through snail mail without any way to confirm the recipient even got it (until you received payment).

Nowadays, invoicing is often cloud-based with built-in analytics that track when an invoice has been opened and read. There are numerous integrated, easy options for payment as well as online payment solutions like Paypal or Stripe.

Writing invoices doesn’t have to be hard! Start with a professional layout

Invoices are an essential part of any business operation, but they don’t have to be complicated and you don’t have to be an expert accountant to put one together.

You can build a simple yet clear invoice in most word processors like Google Docs, Microsoft Word, Excel, or even an invoice generator. But fair warning, going that route might not be desirable when it comes to looking professional.

Alternatively, you can use one of our professional invoice templates if you want to save yourself some time and make sure it turns out top-notch.

You can even use these invoice examples as a starting point to build from.

Many small business owners we work with report getting paid in record time thanks in large part to these free invoice templates.

However you choose to build your invoices, you’ll want to make sure you include this essential information in this general order as you go through the invoicing process:

  • Your name/your business’ name
  • Customer name and contact information
  • Goods or services (line items)
  • Sales terms
  • Conditions
  • Signature area

Keep reading for more specifics on each of those points as we dive deeper.

Brand your invoice in the header

You might be doing your brand a disservice if you don’t include your logo and any other distinct features of your brand.

Give your logo some prime space on your invoices in the header. You can even spice it up throughout the document with any colors or fonts that are distinct to your brand.

Consistently bringing your brand to the forefront of all of your correspondence is more likely to increase familiarity with and fondness for your brand.

If you don’t have a logo yet or the skills to design one, it might be worth exploring Fiverr or Upwork to have a freelancer design a logo for you.

Even if your brand is just your personal name, you can make a stylish and effective logo that will help your invoice stand out from the stacks of invoices on your client’s desk.

Another option is to include your headshot on your invoice. This is an easy alternative if you don’t have a logo yet, and putting a friendly face on your invoice is more likely to build trust and rapport with your client.

Branding your invoices is an excellent way to build your reputation, support your marketing initiatives, set yourself apart from competitors, and showcase your professionalism.

Include your contact details

Whoever you’re issuing an invoice to should immediately know how to get in touch with you by looking at your invoice.

Chances are, they might have questions, or, worst-case scenario, they may dispute some charges and want to discuss them with you. In the best case scenario, they’ll want to contact you for more of whatever it is you’re selling.

It’s also a legal requirement to list your contact details on an invoice. This generally includes your name, phone number, email address, and business address.

You might want to consider establishing a specific phone number or email address associated with invoicing. This will give your customers a clear and direct route to the right person they should be speaking with about their bill.

Whichever contact information you choose to put on your invoice, make sure it’s an email inbox or phone voicemail that is regularly checked so that any customer queries can be responded to promptly.

List your company name and information

Adding your company name to your invoices is absolutely essential.

Whether your business is simply your personal name or a registered business name, you’ll want to include it near the top of your invoice.

Preferably, your company name will be the first thing the recipient reads so they know exactly who the invoice is coming from.

If you have a business registration number of some sort then you’ll want to include this along with your company name.

Depending on the customer, they might have tens, even hundreds of invoices coming across their desk every day. Clearly stating your company name and information will help your invoice to avoid getting lost in the weeds.

Write a description of the goods or services you’re charging for

These descriptions don’t need to be the length of a novel, but they should have enough detail for your customers to know exactly what it is they’re paying for.

You’ll want to add descriptions for each separate good or service on your invoice so that every item is clear.

Invoices that lack clarity when it comes to the goods or services descriptions lead to more questions from customers, which can add up to a frustrated client and bigger delays in receiving payment.

After you’ve added a clear description of each item you’re charging for, you should add in the quantity of good or service and the price.

If you’re billing for hourly work completed, list the hours completed for each service and the rate that those hours are being billed at.

Add the dates

Dates add context to an invoice and make the whole document more clear for your customers. It also gives reference points that you and your client can use as a touchstone when it comes to payment due dates.

Most importantly, you’ll want to add:

  1. The date you supplied your goods or services
  2. The issue date of the invoice

Many professional invoices will commonly list the submission date near the top of the invoice and incorporate the supply date near the description of goods and services.

Including accurate dates will ensure your customers know exactly when you completed work for them or sold them certain goods and when the invoice has been issued.

Total up the money owed

Along with the description of goods or services provided, you’ll need to include the amounts owed for each item.

To the right of each item, you’ll include the subtotal – the amount of each individual item.

As you move further down the invoice line by line, you’ll gradually total up these amounts for a grand total amount due.

This final amount should be clearly listed near the bottom of the invoice as a total cost.

Double and triple-check your amounts and ensure that you’ve added all necessary taxes and the total amount owed is correct.

Explain acceptable payment terms

Ideally, payment terms should be discussed with the customer before the rendering of goods or services and mutually agreed upon, but even still, you’ll want to list these terms clearly on the invoice.

How do you want to be paid for your services? Will you accept cash, credit card, check, or online payments? What about different payment providers like PayPal?

Here’s a list of some of the most common payment options business owners include on their invoices:

  • Cash
  • Credit card
  • Check
  • Bank transfer
  • Online payments
  • Mobile payments
  • Automatic payments

If you want payment directly to a bank account then you’ll need to supply banking details on the invoice as well.

All of these different payment options have their pros and cons, such as fees and convenience, so carefully consider which ones you’ll include.

Here are some factors to weigh as you make your selection:

  • Cost: When assessing a payment method, consider how much it will cost your business to use it. Most credit card processing options charge transaction fees when you accept card payment. Additional costs may come in the form of hardware if you’re accepting in-person credit card payments and mobile payments.
  • Convenience: Think about how easy it is to accept the payment methods you’re considering. For example, checks typically require a trip to the bank to deposit your money and banks often put a hold on the funds for several days. On the other hand, online payment options require little to no work on your part and the money will show up in your bank account within a couple of days.
  • Security: Every payment method you allow for should be secure for the sake of your business and your customers. Cash is relatively insecure since it’s subjected to the risk of theft and loss. Online payments through secure vendors offer fairly high levels of security and encryption so that your client is protected and you receive your payment without hiccups.
  • Client Preferences: Your clients likely have their own preferences when it comes to issuing payment, so you’ll want to consider which methods will be easiest and safest for them to use. Perhaps it might be worthwhile to informally survey a few of your clients to see if they have any preferred options for billing or ask them in the early planning stages.

Besides payment methods, list whether or not you have a timeframe that you expect payment in so that your customer is clearly aware of the due date.

If you’ll accept payment in portions or in some sort of payment plan, specify this clearly.

The more straightforward you can make your payment terms, the better. Your customers are less likely to be confused and more likely to issue payments on time and in the format that you want.

What is a VAT invoice, and how do you issue one?

The acronym VAT stands for value-added tax, which is a consumption tax used across the European Union and in other countries.

VAT is used in more than 160 countries worldwide and applied to goods, services, and other taxable supplies.

Customers in the EU pay VAT at the time of purchase for each product or service they buy, and the specific VAT varies based on the member state.

If you’re VAT-registered, then you need to be using VAT invoices. The exception to this is if your customer in the EU has a valid VAT number; then you don’t need to charge them VAT on your invoices.

Businesses with valid VAT numbers in the EU are responsible for filing their own VAT. They can then be reimbursed for the VAT charged on products and services that they purchase and use to run their business.

The main difference between a standard invoice and a VAT invoice is the amount of information required.

The exact information varies on the type of VAT invoice you’re issuing, but in general, it should include all of the same information from a standard invoice, plus:

  • Your VAT registration number
  • The date of supply (or tax point) if it’s different than the invoice date
  • The VAT rate and total VAT charged per item (unless all items are charged at the same tax rate)
  • If different items have different VAT rates, then show the rate for each item
  • The unique invoice number
  • The client’s name and address
  • The client’s VAT number, if applicable (If your client has a VAT number, you should then include the text “EU VAT Reverse Charged” on your invoice)
  • The currency applied

VAT invoices may seem more complicated than a standard invoice at first glance, but they’re actually fairly similar at the end of the day.

With PandaDoc’s pricing table feature, incorporating VAT is a breeze when you invoice thanks to the easily editable separate line items.

Send your invoice

One of the most common ways to request payment is to send an invoice by email.

Simply attach your invoice in a PDF format that can’t be edited so that no one can fraudulently manipulate your invoices.

The best practice is to write a brief, clear subject line so your email doesn’t get lost in the ether. For example, you could list a word or two describing the services or goods rendered along with the word “invoice.”

Perhaps you can include the business name or invoice number.

Then, briefly describe your business and the services or goods you provided in more detail in the body of the email.

The downside of email is that you still don’t know whether your customer has received the email, opened it, or is any closer to issuing payment.

In the case that you’re dealing with a late payment, you might want to reach out to your customer with a polite reminder.

Late payments can affect cash flow, so if you want to institute late fees when invoice payment is delayed, you’ll want to list this clearly.

Accounting software such as Freshbooks or Quickbooks can come in handy in these situations since they include reminder nudges as a feature.

Many freelancers have had excellent results with PandaDoc’s invoicing tool and payment solution.

Not only has it allowed them to collect payments from their contracts instantly with a wide range of payment options, but in some cases, it’s even reduced the average payment time to 2 days and increased their close rate by 36%.

Final thoughts on invoicing

Despite the numerous sections of an invoice that are required, the overall process should be relatively simple.

Once you’ve established a process and a template or two that you’re comfortable with, it shouldn’t take very long to put together an invoice for a client.

If your invoices look professional and are organized and straightforward, your invoices are likely where they need to be.

Be open to feedback from clients and if in doubt, get some feedback from colleagues that also issue invoices in their work. Perhaps they’ll notice a few things you can add or remove.

Your invoices are a vitally important point of contact between your business and your clients, and by incorporating these tips, you’ll ensure that your invoices enhance your relationships and most importantly, lead to prompt, hassle-free payments.

Originally published February 14, 2017, updated October 26, 2021

Yauhen is the Director of Demand Generation at PandaDoc. He’s been a marketer for 10+ years, and for the last five years, he’s been entirely focused on the electronic signature, proposal, and document management markets. Yauhen has experience speaking at niche conferences where he enjoys sharing his expertise with other curious marketers. And in his spare time, he is an avid fisherman and takes nearly 20 fishing trips every year.

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