Invoices are probably the most important piece of documentation for every business. It is a document for request of payment for the services or goods a business has provided to the client. You need to ensure that extra care has been taken in creating its format and filling in the information. Many confuse it for a receipt. However, there is huge difference between the two. Receipt is a proof of payment while invoices are requests for payments. Invoices play a big part in keeping the cash flowing in. Here are a few pieces of information that it must have.
1. Id Number
2. Terms and Details of Payment
3. List of all Billable Entities
4. Date of Issue, Date of Delivery, Date of Payment
5. Tax Details
6. Channels for Payment with a Transaction Id
7. Business information and Client’s Information
Every invoice has a unique identification number or a unique invoice reference number. You can choose a framework that works best for your business. Some businesses use date, some use the traditional system. It is completely up to you. However, you need to make sure, it is unique and follow an ongoing pattern. This is specifically for filing purposes but is a definite requirement.
Terms and Details of Payment
Whenever you build a contract with your client, you get all their details. This includes the payment details or how will the client pay you. This means the process of payment – Will it be a weekly payment, a monthly payment, or an hourly payment or a onetime payment. It is generally managed by the bookkeepers. So, make sure to get in touch with the accountant team in charge, and include this information in every invoice you generate.
List of All Billable Entities
It is important to add everything you expect to be paid for. For example, if you are a plumbing company and provide plumbers around the town. Apart from the plumbing services, you might have provided a pipe, a tap, or a tiling fix after the job is done. So, when you generate an invoice you should not simply write “plumbing Job”. Instead mention every billable item in the invoice, with their respective prices. This will help you in saving both your time and money on taxes later on. You need to mention clearly what are the billable entities even if you offered them for free.
Date of Issue, Date of Delivery, Date of Payment
These three things are separate entities. Businesses have their own ways of addressing dates, depending on their industry and geography. Therefore, it is best to follow the formal way of writing dates, instead of using jargons. Whatever you use, make sure the client knows about it.
Tax details are an important piece of information that you need to add in your invoice no matter where you run your business. Make sure to keep up with the latest legal guidelines and clearly mention the tax on the total payment. Some states may ask you to the add tax details per the billable. You need to know all these details.
Channels for Payment with a Transaction Id
Remember, invoice is a request of payment. Mention your bank details in the invoice sheet to expect timely payments. In the days of yore, it was generally bank account details. But now you can add debit card, credit card and wallet links with a transaction ID. This will help you track payments for each invoice.
Business information and Client’s Information
The basic details like name, address, contact details, registration number for your business is mandatory. And similarly, the client’s details should be added.