For business owners, an invoice is typically used for recording the important sales transactions, organizing client payments, staying on top of payment due dates, creating a log for outstanding debts, obtaining details for tax payment time, including services and deliverables, making bookkeeping fast and easy, and more. For a bigger company, an accountant may well be the person who creates invoice and handles all the matters that are related to invoicing and billing. But for small businesses, there is usually no luxury for hiring an accountant to do the job.
Creating an invoice may seem very time-consuming, when it is your first time creating it. Once you have created a template, the invoice can be used for most of the upcoming invoicing for all your customers. The old school way is to manually create the invoice on an Excel spreadsheet or a Word document on a Windows based computer (or PC). When you are a self-employed person, a small business owner, or a freelancer, the much better and scalable solution is to use a professionally developed accounting software such as Freshbooks, Quickbooks, Invoicely, or Xero. The one advantage of using such a cloud-based tool is that for example through the Xero app on your mobile phone or tablet device, you will be able to keep track of all the expenses and income of your business. For example, the Xero accounting software would let you quickly and easily set up an invoicing template and then issue the invoices to each specific customer.
When creating your invoice, you would first create a template. In one of the cloud-based accounting software including Xero, it would allow you to do the following:
- Include a unique invoice number.
- Include your business name, your business logo, and contact details (i.e. contact person name, contact phone number, email address, physical address, etc).
- Include the client name (e.g. a person’s name, or a company’s name), client’s contact details (such as contact person, phone number, email address physical address, etc).
- Include the service name / product name (that you have sold to this specific client), and the quantity, and monetary amount of the product/service. In many cases, it may not be a single item that your customers have purchased, so on your invoice you may have to list all the items.
- Include the sub-total amount.
- Include the date of the invoice and the payment due date (of this specific invoice).
- Include the terms of payment.
- Include the payment methods. The payment methods could be local bank transfer, PayPal, or some other methods that can make it easy for most of your customers to pay you.
Whether it is a standard invoice, a recurring invoice (for long term projects), or a pre-payment invoice, a cloud-based accounting/bookkeeping software is the way to go.