Whether you’re a freelancer or a service-based business, there’s one thing you all have in common: Invoicing. And if you’re planning to have a business based on clients or services, you will have to get familiar with them (sorry, not sorry). But what is an invoice? And better yet, how do you create one?
Don’t worry; this post is going to guide you through the ins and outs of creating an invoice, so when it’s time to send one out, you know exactly what to do.
Let’s start with the basics. An invoice is a document that records the products or services you provide to your customers, plus the total amount due and how they can pay you (visa, cash, etc.). It’s a legally binding agreement showing both parties consent to the included price and payment conditions. However, there are other purposes for an invoice:
Invoices can be paid in one payment or installments. You can send a physical or electronic invoice, depending on how you create your invoice.
Now, you may wonder if invoices and receipts are the same. The answer is no. Invoices are legally binding documents that are used to request payment from a customer. Whereas a receipt is a document that shows the payment has been received by the seller.
Before computers, invoices were manually written out (if you can believe it). But today, you have tons of different ways to create an invoice. You can use templates on Microsoft word, or an invoicing service. However, regardless of how you create your invoices, they’ll all include the same sections.
It’s important to note that you should double-check what’s required for your invoice, as it can vary depending on your business’s industry. However, the sections we’ll discuss below are the basics for most invoices.
The header is the section at the top of the document. This area usually includes the following:
This section focuses on the details of your business and the company/person you’re invoicing. To request payment from a business or person, you need some information from them. Some of their information should include:
Do check your state laws, as some require other information in this section. For example, in the European Union, VAT identification numbers are required to be included.
This section is a breakdown of what you are charging the buyer for. Whether it’s for goods or services, the table will show the good/service, a description of it, the rate per unit/hour, and the total cost of each good/service. Be clear and concise about what you’re charging the buyer for.
For example, let’s say you’re a freelance writer and a company purchased 10 blog posts from you. In the invoice details, you can include the names of the blogs, how many words were written, and the price per blog post. That way, the buyer (and you) understand exactly what this invoice entails.
The image below shows an example of how to describe goods or services in the details list.
This section includes all the payment details that your customer needs to know to fulfill the payment.
Typically, there are two main payment methods: international payment and internal transfer.
When making an international invoice, there are a couple of different payment methods:
Always check local tax regulations for international payments, as they may vary depending on the state you’re in.
Internal transfers happen when you’re invoicing a business or individual from your home country. You can provide them with your local bank account details for this form of payment.
Payment terms are where you need to clearly outline what is expected. This includes the currency your invoice is in, the due date for payment (14, 30, 60 days), and any penalties for late payments.
Now that you know what an invoice is and how to create one, it’s time to create your own!
Follow the steps above and choose an invoice template that suits your needs to get your invoices ready to ship out.
The information provided on this page is for information, educational, and/or editorial purposes only. It is not intended to indicate any affiliation between Tailor Brands and any other brand or logo identified on this page.
Natasha Ivanovic is a Vancouver-born creative writer that started her writing career as a freelancer while studying for her Master’s in Investigative Psychology. On the weekends, she writes short stories for her blog, TheLonelySerb, and cuddles with her bulldog, Bob.