When running your own business, getting paid for delivered products and services is key to your business survival. In order to get paid, you should have a way to invoice clients and send receipts – both for their records, as well as your own for taxes.
While many entrepreneurs, independent contractors, and freelancers want to start lean and avoid the costs of subscriptions and software tools, having good invoice software is critical to running an effective and efficient business. More importantly, making sure every client and customer invoice has all the key components will allow you to track the work delivered, follow up on outstanding invoices, identify your top paying clients, and understand your best-selling products and services.
Here are the Top 10 items and information that should go on every invoice that your business sends out.
Do your invoices have all the necessary information?
Do your invoices have all the necessary information? Below you will find the information that should be included in your invoice templates.
10 Things to Include on Every Client Invoice:
1. Your Company Name & Contact Details
- Tip – Be sure to include your branding/logo at the top of the invoice by your company name.
- Tip – Make sure your mailing address is correct!
- Real-life Example: One of my clients had an agreement/partnership with another business owner to share billing software and licensing tools, but they were essentially two separate financial entities and businesses. The mailing address in their invoicing software tool only reflected the business partner’s mailing address. Every month, several of my client’s customers would forget and would mail a check to the address on top of their invoice … which was to his business partner’s address in another state! When my client would follow up on outstanding invoices, his clients would reply that they had already paid him and mailed their check. This resulted in unnecessary work in following up with his business partner’s financial assistant with the check numbers and amounts and wait for his business partner to send him back the money.
2. Client’s Name & Contact Details
- First and Last Name
- Company Name (if applicable)
- Address
- Phone Number
- Email Address
- TIP – When collecting your customer’s contact information, be sure to have multiple contact methods for your client, especially if the mailing address or email address changes. Otherwise, find out what happened when this business owner couldn’t track down a customer who changed his mailing address.
3. Dates
- Keep track of when the invoice was created and sent.
- Due Date – Make sure it’s clear when the invoices are due and what the payment terms are. This can help reduce the number of overdue invoices.
- Example: “Payment is due upon receipt.”
- Example: “Payment is due in advance.”
4. Invoice Number
- Be sure to have unique invoice numbers for financial record keeping.
- Tip – If you are just starting out in business, try not to bill your first customer with “001.” It will be painfully obvious that you are a newbie. Instead, start somewhere like “201” and go up from there!
5. Product / Service Name
- Tip – Make sure the product or service name is descriptive and unique enough so when you look at the reports, it’s easy to identify your best-selling versus under-performing products and services.
- Bad Examples: Product 1, Bob Smith, Oak Tree Elementary Fall Festival Event
- Good Examples: Get Clear, Get Confident Coaching Program; Signature Talk Speaking Event, FreshBooks Coaching.
6. Description
- Include a short description of the product or service for reference.
7. Cost / Price
- Include the unit cost
- Include any discount given.
- Indicate if a deposit is required.
8. Terms and Conditions
- Include statements of late payment or cancellation penalties, return or replacement policy, terms of sale, etc.
9. Notes
- Include any notes as applicable to the client, or simply write, “Thank you for your business!”
- Example: If an existing client is renewing a contract, you can indicate that this invoice is for the next signed agreement.
10. Payment Method
- Make sure it’s clear what method of payments that you accept and how the customer can pay you! Do you accept credit card payments, ACH bank payments, and online payments?
- Real-life Example: I’ve seen (and received) invoices that didn’t have any instructions on how to pay. I once had to email a business owner, asking how to pay my invoice. There were a few days of emailing back-and-forth because the person didn’t want to accept credit cards payments or checks, only PayPal. Then, he said he would have to charge an extra fee for accepting a credit card. Being upfront with customers on billing and payment options, especially if you offer online payments, will save you time and help you avoid a negative customer service experience.
Sample invoice with a discount offered.
Paper invoices don’t allow for easy financial reporting.
I’d love to hear your thoughts! What invoicing system do you use? What challenges have you faced when creating invoices and following up on payments?
