How to Make an Invoice

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Learning how to make an invoice properly is the key to getting paid as a business owner or solopreneur. There’s a subtle art to invoicing; a blend of math, design, technology, and psychology. In this article, we’ll explain how to create invoices that look great, get taken seriously — and get you paid.

Key Takeaways

  • Invoices may seem mundane, but they communicate a lot— amounts, dates, payment types; but also less tangible things like professionalism, trustworthiness, and branding.
  • Clarity and detail are vital if you want to be paid on time. Customers expect to know exactly what they are paying for and how much, product by product and service by service.
  • Free invoice templates can save a lot of time, but they tend to be dull and are often hard to customize. Creating one yourself from scratch is one option. Using a dedicated invoicing solution will give you a lot more options.

How to Make an Invoice

First, the basics. An invoice is a detailed statement of what a client or customer owes you after you deliver a product, provide a service, finish a project — or complete a project phase.

It lists the services or goods your company provides, says what each item costs, then totals everything to show how much money is due.

It also displays a date by which you would like to receive payment and explains the forms of payment you accept.

Invoices have standard elements, and there are non-standard elements you can add or spice up to make it more than just a bill.

Anatomy of an Invoice

Header Information

Whether they click a PDF or peel open the envelope, your customer will want to know straightaway who the invoice is from. Large firms often have a standard procurement process and approved vendors list.

They’ll need to check if you’re on it. Smaller businesses will have approval processes of their own, even if it’s as simple as the owner saying, ‘Yes, this is legit.’

At the top of every invoice, you should include

  • Your company name and logo: This explains where the invoice came from and also gives you an opportunity to display your company’s branding: logos, fonts, colors, or wordmarks.
  • Contact information: Your customers will want to know how they can get in touch with you easily if they have questions or concerns. This section should include your street or postal address, phone number, email, and website URL.
  • Invoice number: Your invoices should have a unique number and use a naming format that makes each invoice part of a sequence. This helps accounts payable teams file your invoices together and can even speed up payment by making it easier for them to double-check that an invoice hasn’t already been paid.
  • Due date: The ‘payment due by’ date clarifies the latest date you’d like to receive payment. Not every invoice includes one, but many do. Sometimes a company processes all their bill payments in scheduled batches. If you give them a specific date, it’s easier for them to slot your invoice into their workflow.
  • Other details: Include your business registration number or tax number if you have one. Include the date the invoice was sent. If the job had an associated estimate or purchase order number, include that information on the invoice.

Client Information

It may seem obvious, but it’s still worth saying: you need to make sure the invoice is addressed to the right person. Some businesses have more than one budget owner, and sometimes the person who approves or processes invoices changes.

And let’s face it, if you’re running a small business, you’re usually juggling 10 things at once. It’s easy to make mistakes.

  • Client’s name and contact details: Make it clear to whom the invoice is being sent, with full name, company, title, and department. This is sometimes accompanied by a line that says ‘Attention: [customer name]’.
  • Client’s billing address: Include the client or customer’s current business address. If it’s a large company, make sure you have the correct location. Account payable departments are often located outside the official company HQ or might be an outsourced service in a different town, city, or country.

Itemized List of Products/Services

Now it’s time to explain what exactly you’re invoicing for. Each service or product you deliver should have its own line on the invoice, with a clear description of what you provided.

Beside the description on the right will be columns indicating the cost of each product or service. If you charged by the hour, it may make sense to include the number of hours and the agreed rate.

  • Description of products/services: These are individual line items that make clear what you want to be paid for. When you name a line item, use simple language and be super clear. For example, instead of writing ‘house painting’ as a line item, be more specific. Write ‘2x bedroom interior painting’ or ‘touch-ups to kitchen walls post-renovation.”

You might also include product names or materials, like the paint brands you used or any decorative elements you installed as part of the job.

Tip: If you sent a detailed quote to your before starting the job, use the same language and copy line items from the estimate over to your invoice.

  • Quantity and unit price: In the case of products, including how many you delivered (1x item A, 3x item B, and so on) in a column labeled ‘Quantity’. Then include the price of a single unit of that product in an adjacent column called ‘Unit Price.’ Next to that will be another column labeled ‘Price.’ It multiples the unit price by the number of items delivered. If you’ve provided a service by the hour, ‘Quantity’ will simply be the number of hours worked, and ‘Unit Price’ will be the hourly rate you charged. If you provide different services at different rates, be sure the Unit Price is accurate. You don’t want to over — or under-charge.
  • Subtotal, total, and tax: When the line items are complete, you can add them together at the bottom. This figure will be labeled the ‘Sub-Total,’ which is the total amount you’re charging before taxes are added. The next step is to add a line below that for taxes. It should say what type of tax (VAT, sales tax, etc) it is and clarify how it’s calculated (usually, it’s a percentage of the sub-total). Add the sub-total and tax figure together in a third line and you have the invoice’s ‘Amount Due’ figure.
  • Credits and discounts: Depending on what you’ve agreed with the customer, you may also want to include a line for discounts or any credits the customer is due, perhaps some un-used budget from a previous project, an X% off sale price, or a loyalty discount designed to incentivize repeat business. If so, add this line at the bottom and subtract it from the Amount Due figure. Pro -tip: Label the new reduced figure something catchy and positive, like ‘You pay only …’ so the client sees clearly that you’ve given them extra consideration on price.

Payment Terms

When you’re running a business, you’ve got bills of your own to pay, and you need to keep the lights on. It’s critical that invoices are paid in a timely manner. Clarifying payment terms on the invoice can help eliminate delays and disagreements. It’s also a crucial component of good customer service.

Your payment terms and conditions (or Ts & Cs) can affect how long you’ll wait to get paid. Without them, you aren’t communicating your expectations clearly. The customer will have to guess when the invoice is due or take time out to contact you and clarify what your preferred payment method is. In either case, confusion and late payments could be the result.

  • Payment terms: This line typically describes what your standard waiting period is for payment. It’s usually expressed as a number of days prefixed with ‘Net.’ So a Net-7 payment period means customers should send payment within seven days of receiving the invoice. Net 14 means payment within 14 days of receiving the invoice, and so on.
  • Due date: If you expect payment on or before a specific date, include the deadline on your invoice.
  • Payment methods: This tells the customer the method they should use to pay you: bank transfer, PayPal, another online payment processor like Stripe or Square, or other options you select.
  • Late payment policies: To help incentivize timely payment, it’s a good idea to have a late payment policy and include it with the Ts & Cs. They encourage customers to pay faster — a great way to improve cash flow. You can charge a flat fee for late invoice payments, charge a rate of interest, or both. Interest rates are the most common, with penalties typically set at 1% or 2%. A flat rate penalty could be levied for every week or month an invoice payment is delayed. Pro tip: For fairness, set different penalties for different outstanding amounts. For example, charge $10 for invoices under $600 and $20 for bills over $1,200.

Choosing the Right Invoice Template

One way to save time and build a professional invoice quickly is to use an invoice template. It can help clarify what you’re charging customers for, strengthen your business’s credibility, and give clients confidence that you know what you’re doing.

There are free templates included with Word, Excel, Pages, Numbers, and other applications. You can also find free templates online that give you a solid structure to start with. We’d say most of these are fine — but bland. They can also be glitchy and hard to work with. Add too much text or try and insert an extra line item, and the design can go wonky, quickly.

Online Invoicing Tools and Software

Online invoicing generators and invoicing software tools tend to be a better option. They’re flexible and allow you to add your branding, tailor the layouts to your liking, and create new customized templates for specific customers or by type of service.

The best tools have a drag-and-drop interface so you can easily add images and logos. Some let you turn quotes and estimates into an invoice at the click of a mouse.

Check out our list of best invoicing software solutions.

Tips for Creating Professional Invoices

To make your invoices stand out, get noticed, and get paid on time, build your invoices with these values in mind:

Clarity and Transparency

  • Be clear and detailed in your descriptions of products and services delivered. If the work began with a quote or PO, reference the quote/PO number in the invoice and reflect the wording wherever you can
  • Price each line item separately and include both a unit price and the quantity of products, materials, or hours you’ve provided.

Branding and Design

  • Incorporate company branding by integrating your logos, wordmarks, fonts, and colors into the invoice so your identity shines through.
  • Choose a clean and professional layout. Remember that your invoice is like a mini advertisement for your business. Ensure that it looks good, is bright and colorful, is easy to read and understand, and makes clear your expectations for payment dates and payment types
  • Because it doubles as a marketing tool, it’s fine to promote your social media accounts and include links to your pages and profiles on each invoice.

Invoice Example

An example of an invoice

Invoicing: Go Beyond Bland

Getting invoices right is important, but it doesn’t have to be complicated. Follow a consistent structure, create a list of things to double-check before sending, and approach them as mini advertisements for your business’s reliability and professionalism.

Final thoughts:

  • Before you send an invoice, ask yourself if the customer is expecting it. An invoice that arrives out of the blue might be missed or ignored. Worse, you might annoy the customer. When you’re negotiating a scope of work or taking an order, explain when the bill would normally arrive — month end, shortly after project completion, upfront, and so on.
  • For business-to-business customers, the legal name of the business might be different from the storefront name you’re familiar with. Double-check before sending.

For more invoicing tools and ideas to make your invoices stand out, check out our list of invoicing software reviews.

FAQs

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Mark De Wolf
Tech Writer
Mark De Wolf
Tech Writer

Mark is a freelance tech journalist covering software, cybersecurity, and SaaS. His work has appeared in Dow Jones, The Telegraph, SC Magazine, Strategy, InfoWorld, Redshift, and The Startup. He graduated from the Ryerson University School of Journalism with honors where he studied under senior reporters from The New York Times, BBC, and Toronto Star, and paid his way through uni as a jobbing advertising copywriter. In addition, Mark has been an external communications advisor for tech startups and scale-ups, supporting them from launch to successful exit. Success stories include SignRequest (acquired by Box), Zeigo (acquired by Schneider Electric), Prevero (acquired…