Getting paid promptly starts with properly sending invoices. Read on for a primer on how to send invoices the right way. We'll also offer advice for how to effectively follow up on your invoices to make sure you get what you deserve.
What is an invoice?
Not all business transactions are compensated at the time of sale. In many situations, small businesses must rely on the promise of payment at a later date. This is when an invoice can prove invaluable.
An invoice is a document created by a supplier showing the amount due for products or services purchased by a customer or client. Typically, suppliers cannot be paid until an invoice is received, approved and processed by the customer. This means that the lifeblood of your business is dependent on a streamlined invoicing process.
What to include in an invoice
At a minimum, invoices should include the following information:
- Invoice ID and date
- Supplier and customer names and contact information
- Description, per-unit price and quantity of goods or services delivered
- Total amount due
- Payment due date
- Currency type
You may also include, at your discretion, the following data:
- Late fees: This is a penalty fee you impose for late payment.
- Discounts: If you're offering a customer a discount, indicate the discount and reduced rate.
- Taxes: If needed, indicate the type and amount of tax you're imposing on the amount owed.
Invoice software such as Harvest, FreshBooks and Due contain pre-built templates with the above key fields and more. This can save you countless hours of administration in the span of a year.
If you prefer to create invoices manually, you can also compile this information into a Microsoft Word document. Save the file as a PDF to make it a read-only document.
You can fill out an invoice at any time before, during or after completing a work product. It can be helpful to start filling out an invoice early when delivering a high volume of goods or services.