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Key Elements Every Invoice Should Include

Updated: Aug 26, 2022

An invoice is an important document a business uses to help collect payments from a client. They include the cost of the products purchased or services rendered to the buyer and can also serve as a legal record if they contain the right ingredients.

Whether you are a new business owner just setting up your accounting software or an existing business needing to submit an invoice, it is essential to have a well-designed invoice to provide to your clients. Many small business owners are unaware of what information they should include on their invoices when they are billing their clients. Here is the basic information every small business owner or freelancer should include:

The Word "Invoice"

Having the word "Invoice" printed in a bold and large font on the upper corner of an invoice makes it clear to your clients that it is a bill.

Invoice Number

Assigning a unique number to each invoice is vital. This makes it simple for a business and its clients to refer to the same document. Using a sequential numbering system is the easiest way to manage this.

Your Company Name and Address

You should state your legal business name on any invoice you submit to a customer. Additionally, it is best to list a legal business address or PO box where you can be contacted in case of a dispute.

Your Clients Company Name and Address

Including a company's name is a standard procedure for all invoices. Additionally, adding a client's business address is highly recommended, especially for customers with more than one business location.

The Date of the Invoice

Specifying the date when the invoice was generated is crucial to reflect the due date based on the payment terms.

A Description of the Goods or Services

A clear description of the goods and services being billed for is very important. It is best to list each good or service on a separate line for clear identification.

Amount of Goods or Services to be Paid

After the description of the good or service provided, you should have a price specified for each good or service.

The Date Goods or Services Were Provided

Typically referred to as the "Supply Date" or "Service Date," this is when the goods or services were issued or rendered. This date may differ from the invoice date but is usually within 30 days.

Payment Terms

Specifying the payment terms is vital to make it clear to your clients when their payment is due. Examples of common payment terms are: Due on Receipt (due immediately), Net 15 (due within 15 days from the invoice date), Net 30 (due within 30 days from the invoice date), 2% 10 Net 30 (client receives a 2% discount if the invoices is paid within 10 days, after day 10 the 2% discount no longer applies and the payment is due within 30 days from the invoice date), etc.

Purchase Order Number (If Requested)

Some companies provide a vendor with a purchase order number (PO#) for each order. This number is critical to include on an invoice, especially when providing goods or services to larger companies, as it helps an invoice get approved for payment sooner. Additionally, some businesses may also require that the name of the purchaser to be shown on the invoice for reference.

Total Amount Charged and Sales Tax Information

Every invoice must show a subtotal, any sales tax due (if applicable), and the total amount due from the client.

How to Pay the Invoice

To help simplify the payment procedure for your clients, you should provide them with details on the payment methods you accept, along with mailing addresses, e-mail addresses, and bank information where they can submit payments.

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