Crafting an Effective Business Invoice—The Key Elements

A business invoice is one of the most crucial documents that an enterprise creates, as it directly affects when and on what terms they receive payment from their clients. It also assumes a huge role in business for reasons such as record keeping, business analytics, easy tax filing, and legal protection.

An effective invoice is especially necessary for a small business sending out their first few ones, as it shows the client how professional they are (or are not). Therefore, a small business invoice has to encompass all the elements discussed below.

What is a business invoice?

A business invoice, which is also called a bill or a tab, is a document issued by the seller of a product or service, letting the customer know that payment is due.

         Also Read: How to Choose a Small Business Invoicing Solution: The Complete Guide

What should an invoice look like?

An efficient small business invoice has several features that differentiate it from the ones that get lost in the client’s mail.

  • The word ‘invoice’ and the company’s logo: For easy identification, these two elements are to be prominently displayed on the invoice.
  • Invoice number: Every invoice you send must have a unique ‘invoice number’, ‘reference number’, or ‘purchase order number’ to make it stand out from your other invoices.
  • Date of rendering the service: Adding this element saves time during cataloging.
  • Date of sending the invoice: Emphasizing this detail goes a long way in ensuring on-time payments.
  • Name and contact details of the seller: The client has to be provided with these details, so they can reach you if they need any clarifications.
  • Name and contact details of the customer: Including these details to the invoice is crucial, as they provide it with the necessary legality.
  • Terms and conditions section: Pay extra attention to this section. This part has to include the company’s terms and conditions for the transaction, such as the due date and the penalties for non-compliance. Also, worth noting is the fact that the terms and conditions need to be easily understandable.
  • A brief description of the service provided: Adding a line or two about the product will go a long way in clearing ambiguity about the bill.
  • Cost per unit of product or service rendered: A lot of confusion can be avoided by adding this information to the invoice. This allows the customer to easily determine that the billing amount is accurate.
  • Rate of the tax imposed: Stating this separately provides the client with a clear idea of how the billing amount was arrived at.
  • Total amount due: Another key to a good invoice is the ‘total amount due’ section. This gives the client a way to check if the rates add up and if it coincides with their calculations. Also, another important element to be added in the invoice is the currency in which the amount is mentioned.
  • A personal touch: This is the step that separates a professional business invoice from an amateur one. Take the time to add a personalized note, such as a line thanking the client for the business. It goes a long way in showing the client that you appreciate them.

Hacks to make your life easier

Getting an invoicing software online to manage small business billing needs has been recognized by many as the prudent option. Invoicing software is objectively more convenient and saves money and time. Generating an invoice has also become free with the emergence of market players such as CloudBooks, whose small business invoice template can be found here. So go ahead and send your invoice with confidence—successful and timely payment is one efficient invoice away.