Whether you operate a local business or an online store, you’re legally required to have an invoicing system in place. This ensures the accuracy of each transaction and establishes an obligation on the part of your client to pay.

But what is an invoice? And is it really necessary?

An invoice is a document used to record transactions between sellers or service providers and customers. It helps you get paid promptly, facilitates legal compliance, and makes it easier to track sales.

As a business owner, it’s your legal obligation to invoice customers.

Interested to learn more? Here’s what you should know about invoicing and how to do it right!

What Is an Invoice?

Invoicing is a must for any business. If, say, you’re a web designer selling WordPress themes online, you must send an invoice to each customer. The same goes for consultants, lawyers, manufacturers, and so on.

An invoice is a legal document that records the goods or services you provided to your clients. It also specifies the amount of money to be paid and how the payment will be made.

Depending on your preferences, you can write an invoice by hand or use invoice templates from Adobe Spark. Another option is to use invoicing software.

Regardless of the invoicing system, this document should have a clear layout and accurately record each transaction. Its role is to protect your company’s cash flow, ensure good record-keeping, and help you get paid faster.

Invoicing can also boost your marketing efforts. By putting your logo on this document, you’ll constantly remind customers about your business.

What Does an Invoice Include?

From a legal perspective, invoices should include all of the information required to get paid.

This means you must include your company’s name and contact information, as well as the name and address of your customer.

Additionally, it’s necessary to list and describe the goods or services provided.

A basic invoice should cover the following information:

• Date (day, month, and year of invoicing)
• Invoice number
• Name and address of your business
• Name and address of the customer
• A clear description of the goods and services you’re charging for
• The amount you are charging
• Tax (if applicable)
• Total due
• Payment terms

European businesses are also required to include VAT details (if applicable).

Make sure you clearly describe what you’re charging for. Otherwise, your clients may get confused and refuse to pay. Include proper item descriptions and be transparent with your pricing terms.

While there’s nothing wrong about sending an invoice in Word or Excel, it does look unprofessional.

Your best bet is to use invoicing software or customize a free invoice template with your logo and business information.

Invoicing Made Easy

As you see, invoicing customers isn’t that difficult. Keep your invoices simple and double-check them to make sure they include all the required information.

Ideally, send an invoice immediately after completing the project or receiving an order. The longer you wait to send it, the longer it will take you to get paid.

Consider listing multiple payment options on your invoices. These may include PayPal, eChecks, direct bank deposits, and more. Make digital copies of each invoice and save them on your computer or in the cloud.

Still wondering “What is an invoice?” Browse the rest of our blog to find out more! We have lots of articles, guides, and helpful tips for businesses in every niche you could think of.