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How to Write an Invoice

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10
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Updated on:
December 21, 2023
December 21, 2023
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Want to get paid? If you’re a business owner or freelancer, we bet the answer is an enthusiastic Yes! Afterall, generating revenue is what keeps your business thriving, allowing you to serve more customers and scale to new heights.

That’s why invoicing is such an important part of owning a business. Invoices tell your customers what services or products you’ve provided, how much they cost, and how to pay you. This makes it easier for you to get paid on time (and correctly).

In this guide, we’re covering how to write an invoice from start to finish, with all of the important details that ensure you get paid the right way!

What is an Invoice?

An invoice is a document that serves as a record of a transaction between a seller (business) and a buyer (customer). This invoice typically contains itemized products or services provided, along with their respective costs, making it easy for buyers to see how much they owe.

In essence, an invoice serves as a formal request for payment, providing a breakdown of the transaction between both parties involved. It also lists the client’s information, such as their name, company name (if applicable), address, and contact details, and features a unique invoice number for easy identification and tracking purposes.

Importance of an Invoice in Business Transactions

There are many ways to ask a customer for payment – for example, sending a PayPal request, asking for a check, or providing a Venmo link, just to name a few. And while these methods can work, they often make it difficult to streamline your bookkeeping and following up with outstanding payments.

With that, businesses and their customers both benefit from the use of detailed invoices.

Here are a few benefits of using invoices in your business transactions.

Set Clear Expectations

On the business owner side, creating professional invoices helps ensure that all payment details are clear, clients understand what is owed, and there’s a final receipt of services or products provided. On the customer side, invoices provide clear payment options, itemize all the products, services, and prices, and set expectations for when the work will be completed.

Outline Payment Terms

An invoice specifies payment terms, including the due date by which the payment must be made, outlining the agreed-upon timeframe for settling the dues.

Provide Tax Details

An invoice also includes tax details, mentioning any applicable taxes on the products or services provided. The invoice further outlines accepted payment methods available for the client’s convenience. Once compiled, the invoice is sent to the client, requiring their approval before payment.

Save Financial Records

It functions as a legal document that not only records the details of the products or services rendered but also ensures clarity regarding the financial aspects of the business deal. By specifying payment terms, tax details, due dates, and accepted payment methods, an invoice streamlines the invoicing process, fostering transparency and accountability. As a formal record of the transaction, an invoice also acts as a crucial reference for both the seller and the buyer in maintaining accurate financial records and documents.

Monitor Transactions

Your invoices should include a unique invoice number, making it easy to track and organize previous transactions. You never know when you might need to reference an old project or provide proof that a client forgot to pay. And with online invoicing software, you’re even able to monitor payment status in real time, and send automated reminders.

Key Components of Writing a Professional Invoice

Writing professional invoices doesn’t have to be complicated. With the free invoice templates from Bonsai, you already have an easy-to-follow framework for creating your own invoices – just download, edit, and send!

All invoice templates contain the key components needed to complete a detailed invoice. Check out the sections below to learn how to start writing your own invoices for your business.

Check Our Free Downloadable Invoice Templates!

Top Invoice Header

Invoice Title

Provide a brief title that identifies the purpose of the invoice.... truncated ...

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Guide to Writing an Invoice

Writing invoices has never been easier! With Bonsai, you now have the tools you need to design, customize, send, and manage your invoices like a pro. Our free Invoice Generator is simple – just plug in your invoice details, click “Download Invoice”, and send your completed invoice in seconds.

Get started with our online Invoice Generator or any of our ready-to-use invoice template types below to level up your business!

Try Our Free Invoice Generator!

Start with a Professional Template or Invoice Software

Don’t know how to design an invoice? No problem! Our ready-made templates allow you to create detailed, professional-looking invoices in seconds. Using a professional invoice template offers a structured format to specify and detail the services provided. These templates streamline drafting, outlining sender and recipient information, itemized lists, and payment terms. You can customize with company logos and colors before finalizing for printing, emailing, or digital records.

Choose from our extensive list of templates:

Send invoices even faster with online tools! Invoicing software simplifies composing and formatting invoices in just a few clicks. Bonsai calculates totals, tracks records, and allows for customization, all in one place. After detailing services and editing, it enables easy emailing, updating, and record-keeping throughout the payment cycle.

Personalize with Company Logo and Branding

Provide the same familiar feel and branding seen in your other business marketing materials. Personalizing your invoices with your company logo, colors, and fonts creates consistency and builds trust with your customers. Your invoices can look great AND get the job done.

Fill in the Relevant Information

When it comes to accurate invoicing, the details matter most. Whenever you create a new invoice, be sure to include this information:

  • invoice number
  • date of issue
  • due date
  • customer information (e.g. client's name and address)
  • business name and address
  • list of products/services
  • unit price
  • quantity
  • total amount
  • tax details
  • payment terms
  • payment methods
  • notes or special instructions
  • business logo
  • contact information
  • bank account details
  • currency
  • discounts or adjustments
  • subtotal
  • grand total

Detail the Services or Products Provided

Whether you’re using an invoice template or online invoicing software, you should include line items for all services or products provided under the invoice agreement. For example, if you are a graphic designer, you might have line items for “Initial Consultation Call”, “Brand Board Creation”, “Logo Design”, and “Brand Assets Delivery”. If you are a construction company, you might have line items for “Building Materials”, “Contractor and Team Labor - Hours”, “Permit Fees”, and “Renovation Services”, with corresponding costs for each.

Set Clear Payment Terms and Methods

There’s little use to an invoice if clients don’t know how to pay you! So, it’s important to make it super clear how clients should issue payment. With online invoicing tools, clients can typically click “pay now” and choose their payment method. With a templated invoice, you might accept certain payment methods, such as PayPal, Venmo, checks, or ACH transfer. In any case, make sure the payment terms and methods are specified on the invoice page.

Review and Send Promptly

The last crucial step is to review and send your invoice. This action ensures accuracy, professionalism, and timely payment for the goods or services provided.

Begin by double-checking each part of the invoice, verifying that all details—such as the client's information, itemized services or products, payment terms, and due dates—are correctly entered and align with the agreed-upon terms.

Utilize accounting software or specialized invoicing apps that offer features to automate calculations, track outstanding payments, and generate professional invoices. For instance, tools like Bonsai provide user-friendly interfaces where you can customize invoices, add your company logo, and select preferences for payment methods or invoice templates from the menu options. In some cases, attaching a personalized message or thanking the client for their business can strengthen relationships and prompt faster payments!

Once you've confirmed the accuracy of the invoice, sending it promptly is essential. Use the preferred communication method established with the client—be it email, a dedicated invoicing platform, or mailing a physical copy—to send the invoice. This not only demonstrates professionalism but also allows for any potential issues or questions the client might have to be addressed promptly.

Finally, after sending the invoice, keep track of its status. Many invoicing software options offer features to track the invoice's progress, indicating whether it's been viewed, paid, or if there are any pending actions required. Follow up on outstanding payments or acknowledge receipt of payment to keep the project moving forward.

Best Practices for Invoicing

At Bonsai, we provide resources for business owners, contractors, consultants, and more who are looking to simplify their invoicing. Check out our blog for more advice, tips, examples, and tutorials regarding invoicing, bookkeeping, and business accounting.

Ready to create a new invoice? Follow these best practices below.

Importance of Clarity and Professionalism

As a business owner, your goal is to provide amazing products/services and the best experience possible. This extends to your invoicing practices as well. Creating detailed and clear invoices provides clarity to your customers, conveys professionalism, and ensures you get paid correctly every time. This can ease your cash flow and make a huge difference in your business.

Timeliness in Sending Invoices

The best time to send an invoice is shortly after you have discussed the costs and payment terms with your client. This is because the transaction is already top-of-mind for your customer, so they are expecting the invoice. If you are collecting a deposit upfront, you should send the invoice right away. If you are collecting payment at the end of the project, you can send the invoice but set a due date near the end of the project, and send a reminder as you approach the due date.

Following Up and Offering Incentives for Early Payments

Consider offering discounts for early payment or “pay in full” clients. For example, if a client pays for the entire project upfront, you could issue a 10% discount, compared to them being on a payment plan over time. Otherwise, don’t be afraid to follow up on invoices several times if you are still waiting on payment. Once payment is finalized, you’re good to go!

Utilizing Invoicing Software and Tools

Creating and sending manual invoices can feel like a chore, especially if you are managing multiple transactions at once. With online invoicing software and tools, you can save loads of time in your invoicing process. Duplicate existing template, re-use previous invoices for clients, set automated reminders, track payment status, and even review your business financials in a single dashboard. Free templates are great but automated tools take your business to the next level!

Key Takeaways

Overall, free invoice templates make it easier than ever to create your own business invoices, without fumbling with complicated spreadsheets or design software. With Bonsai, all you have to do is download a template, plug in the details, save, and send.

Begin by using professional invoice templates or specialized invoicing software to streamline the creation process. These tools offer pre-designed formats to detail services, specify payment terms, and list items accurately. They allow customization with logos, colors, and personalized messages, ensuring a professional touch before finalizing the invoice.

Ensure accuracy by detailing services provided, including quantities, unit prices, and any applicable taxes or discounts. Double-check all information, such as sender and recipient details, itemized lists, and payment terms, before finalizing the invoice. Utilize editing features to update or modify information as necessary, maintaining professionalism and clarity.

Once the invoice is finalized, promptly send the invoice using preferred communication methods—email, printing, or digital sharing. Track its progress using invoicing software to ensure it's viewed and processed. Follow up on outstanding payments, acknowledge receipts, and maintain clear communication with clients, fostering a smooth invoicing process and ensuring timely payments.

FAQs About Writing an Invoice

What Legally Must Be on an Invoice?

An invoice must contain specific information to be considered valid, in a legal sense. It must include the seller's details (name, address, contact information), buyer's details (name or company name, address), a unique identification number, date of the invoice, a clear outline of goods/services provided (description, quantity, price), payment terms, total amount due, and applicable taxes. Compliance with tax regulations is crucial, so ensure tax details such as GST/HST numbers or VAT numbers are included when applicable.

How Do I Ensure I Get Paid on Time?

There are several strategies you can use to encourage on-time payment. First, discuss clear payment terms and expectations upfront, and include them in the invoice. These should include the due date and accepted payment methods. Also, you might consider offering incentives for early payment and/or impose penalties for late payments. Invoicing software can also be used to automate reminders for upcoming or overdue payments, making it easier to follow up with clients. Always maintain open communication with your clients, send polite but firm reminders, and let them know when payments are nearing or past due.

Can Anyone Write an Invoice?

Yes! Anyone conducting business transactions—whether a freelancer, small business owner, or larger corporation—can write an invoice. Professional templates or invoicing software can assist in creating structured and accurate invoices, as the relevant fields are already built in. Just add your branding (if available), contact information, products or services provided, costs, and due date. Regardless of your chosen invoicing method, attention to detail, accuracy, and adherence to legal requirements are essential when creating your invoices.

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