How to Make an Invoice: Step-by-step Process

An invoice acts as proof of the goods or services your company supplies to your clients. The correct invoice is key to acquiring timely payments. Simply put, invoices display the legal right of the company to get paid for the delivery of products or services.

With proper invoices, you can prevent delayed payments and present evidence in case of legal disputes. Also, invoices are some of the main verification documents for an audit.

An organized system with all invoices duly in place will make your audit process smoother for the auditors and your company. It instills confidence in auditors, which is always good for the company’s image.

So, how to create an invoice template or raise an invoice?

If you are new to invoicing, the good news is you will find plenty of free sample invoice templates. If you have been invoicing for a while and looking to upgrade your process, we will introduce you to online invoice software.

What Is An Invoice?

Invoices are documents issued by sellers to their buyers that provide them with information on the quantities and costs of the products and services provided by the seller. A professional invoice states what a customer must pay the seller according to the seller’s payment terms. A customer’s invoice terms indicate the maximum time they have to pay the seller for their purchased goods and services.

So, to raise an invoice, you must consider the following: An invoice must have a statement stating that it is an invoice. You can also find a free invoice template helpful that includes payment instructions and information on discounts, early payment details, or finance charges for late payments. Also included are the unit costs of items, the total number of units purchased, freight, handling, shipping, and tax charges, and the total amount owed.

What Are The Basic Elements While Creating An Invoice?

Invoices are an indispensable part of any business transaction, and they serve many purposes to keep the company running smoothly. So, if you wish to create an invoice template, in this section, we’ll show you what invoices shouldn’t forget to include:

1. The Header

   The header section acts as an introduction to the client. Here, you include your name or your business name. This should be highlighted in a bigger font and different color. Below the name, include your contact details, website, email address, and other pertinent items.

2. Client Info

   Next, the recipient’s information should be included – the client’s name, phone/mobile number, email address, and website, if any, must be mentioned clearly so that you can access even small data in just a few clicks.

3. Invoice Number, Due Date, Payment Terms

   These are the most important details in the invoice. The invoice number is important to keep all your records in order. Next, you should specify the payment terms and the due invoice date. Any ambiguity or confusion regarding payment or the period can delay the whole process. Also, mention the mode of payment preferred by you. Make sure all the customer details are discussed as clearly as possible.

4. Type of Invoice

   Once again, this is to dodge chaos with the client. Depending on your project’s phase, there could be diverse invoices. There are standard invoices, progress invoices, recurring invoices, and many others. Specify the type of invoice you send to your client to avoid ambiguity regarding the payment amount or due date.

5. Specification of Services

   Be sure to provide a clear, broken-down version of your services to the client for a particular job. Describe each task you performed, the date and time, the hours worked on that job, and the rate. The client should get a clear picture of every task you perform during the project and how much it costs. It makes the invoice more transparent and provides an account for each penny you have charged.

6. Tax Information

   When shipping to your customer’s or business’s location, you need to include the total tax on your invoice if there is any value-added or eCommerce sales tax. It is determined by a percentage of the total purchase price (excluding shipping costs), with the exact amount varying from region to region. Sales taxes on online investments are calculated as a percentage of the purchase cost.

7. Timing/ Due Date

   Timing is crucial when sending out invoices if you’d like to get paid for the work you’ve done. Prepare the invoice on time, and send it per the terms of the agreement with your client.

   This could be at the beginning of the project or the end of it. If the project is a long/repeated one and is being completed in phases, You could also set up a recurring billing and invoices system. Whatever the arrangement is, make sure to send the invoice regularly at an appropriate time and to the right person.

8. Include Footnote

   It’s common for invoices to provide self-explanatory information about services and prices, but sometimes they give only some of the picture. For example, you may need to be made aware that one of your line items is being discounted immediately. You can clarify this discount by adding a footnote at the invoice’s bottom. This way, your client will know that future invoices might display higher rates.

How To Make An Invoice: Step-By-Step Guide

A professional invoice can be created at home and on the go using online invoicing software, and you can significantly reduce human error. With efficient online invoicing software, you can send invoices online in seconds, and payments can be collected automatically. Here are some critical elements you need to include in an invoice and why:

1. Choose Your Invoicing Medium

   This is the first step of creating an invoice that makes it easy to follow the rest. As previously mentioned, invoicing becomes easy with billing and invoicing software. You can create your invoices in the online or on-premise billing software.

   Today, companies are integrating their billing system with other software like project management tools, CRM, ERP software, and others. It makes it easy to keep track of all billings and easily create and receive payments

2. Establish Invoice Terms Clearly

   Before the invoice is even created, invoice terms have to be established. Discussing these terms and conditions early on in your relationship is always advisable. Whether it is when the proposal is made, or the contract is created, make your invoice payment terms quite clear upfront. There are a lot of free invoice templates which you can use to make a great Invoice.

   Use simple but direct language to set out the payment terms, so there is no ambiguity and possible misinterpretation. There should be no confusion regarding the payment in the client’s mind. Taking care of this early on will save you trouble later.

3. Use Professional Invoices

   You want your invoices to reflect the values of your business. Use good billing software to make an invoice look professional and sophisticated. With the help of an online invoice generator, you can produce quality invoices in no time, as they have a range of excellent invoice templates to choose from.

   Your invoice should look classy, without any gaudy colors and fonts. The fonts used should have good readability, and each digit should be crystal clear to avoid misunderstanding. If you are creating invoices online, keep these guidelines in mind. Keep it as simple as possible while highlighting important information, such as the due date of the payment.

4. Share Invoices at the Right Time

   As far as possible, make it a point not to delay your invoices and bills. The longer you wait to send out the invoice, the longer it will take for you to receive your payment. If you push for an early fee, say, right after the completion of a project, you are more likely to receive prompt payment.

5. Set Up Recurring Payments

   Be smart about receiving your payments. While creating invoices online, you can set up recurring payments for clients with long-term projects. It’s better and easier than creating a new invoice for the same client every fortnight/month.

   For a long-term or recurring project, it is best to set up a system of regular automated payments from the client’s credit card or bank account. It saves both parties effort and time.

6. Follow Up Effectively

   Despite putting a robust system in place, the need to follow up with clients for payments will eventually arise. Following up multiple times with multiple clients will make you realize how integral it is to obtain the price.

   Following up on prices is also an art and requires flexibility. Stick to a reasonable follow-up timeline: one week for smaller amounts and two weeks for larger ones.

How To Create An Invoice In Excel?

So, you must be wondering how to create an invoice in Excel. In this section, we will explain how to make an invoice in excel. You can select from hundreds of different invoice templates for creating invoices. A customizable Excel template can be used by businesses to create customer invoices. Here’s how to make an invoice in Excel:

1. The first step in making an invoice is to launch Microsoft Excel on your computer.
2. Next, use the search bar at the top of the window and write “invoice” to find hundreds of invoice templates. You must connect your computer to the internet to do this.
3. Selecting the proper invoice template for your company is as comfortable as scrolling through the choices. Excel offers a variety of invoice templates, including service invoices and shipping invoices.
4. When you find the perfect template, check it, & then click on the “Create” button to edit the Excel template.
5. The next step is to edit your created invoice using your selected template. Incorporate the following details in the invoice:

• Your company logo
• Information about your business, such as your name, address, phone number, and e-mail address
• Client’s contact details
• Invoice date
• Unique invoice number
• Payment due date
• Itemized service bill with brief descriptions, quantity, and rate.
• Details about payment methods and late fees
• Total amount due for the invoice, including taxes

6. Eventually, once all the details have been entered into your invoice, save it and revise it afterward if needed. Save it as a PDF and forward it to your client. Enclose a short cover note emphasizing critical points like the invoice due date and the amount owing, and send the finished invoice to your client.

Tools And Software For Creating Invoices

Creating an invoice online becomes a cakewalk with the use of invoicing software. Depending on your requirements, you can opt for cloud or web-based invoicing software that can be accessed from anywhere, using any smart device.

1. QuickBooks

A cloud accounting platform like QuickBooks can help you organize your finances in one place, allowing you to create invoices from any device. With robust functionalities that keep you on top of your finances, this platform delivers some amazing features, such as expense tracking and vendor management.

Key Features

• Create & send custom invoices
• Schedule recurring payments
• Track sales, fees, and profits
• Manages sales tax
• Multi-currency

Pros

• It is an excellent app for sending invoices
• QuickBooks is simple to use and user-friendly
• It offers simplified reports for taxes at the end of the year
• Accountants and auditors can access the data anywhere, anytime

Cons

• QuickBooks is extremely slow to resolve tech issues
• Customer service needs advancement
• The implementation of bookkeeping cleanup is terrible

Pricing

Starts at $10.36 per user per month.

2. FreshBooks

FreshBooks is a fantastic tool for creating invoices and tracking time and expenditures. In addition to offering advanced accounting features, FreshBooks is easy to use and customizable, making it an excellent alternative for organisations looking to adjust and speed financial paperwork.

Key Features

• Reporting & Analytics
• General Ledger and Configurable Accounting
• Expense management
• Time tracking
• Order Management

Pros

• FreshBooks is intuitive and easy to use
• It is perfect for creating & sending invoices
• Effortless implementation & cloud support
• The invoice templates allow for keeping branding professional

Cons

• The app lags frequently
• FreshBooks becomes slow when there is a large volume of data
• The mobile app does not work well for some elements

Pricing 

Plans start at $15 per user per month.

3. Zoho Invoice

Zoho Invoice is an excellent cloud-accounting solution that lets you create and send invoices, track expenses, sync bank accounts, create reports, and do all your accounting on your device. When you use Zoho Invoice, you don’t have to create an invoice manually. You choose a prebuilt invoice design and insert your logo and company information.

Key Features

• Customizable Invoice Templates
• Online Payments
• Transaction Approval
• Recurring Expenses
• Inventory Tracking

Pros

• The dashboard displays revenue and fees in a snapshot
• Regular invoices make the procedure fast and comfortable
• You can attach files to your invoices
• Ability to create credit notes

Cons

• The mobile app does not have all the features
• There is a regular need to update addresses manually
• Lack of advanced features such as reporting

Pricing

Plans start at $10 per user per month.

Common Mistakes To Avoid While Creating Invoices

If you get your invoicing wrong, you’ll disrupt your cash flow and your business’s smooth functioning. It is why we’ve compiled a list of the most common mistakes in invoicing, along with practical suggestions to help companies to avoid such invoicing nightmares. You can save a ton of funds in the long run by dodging the following mistakes:

1. Lack of punctuality & professionalism with invoices
2. Incorrect or missing invoice information
3. Uncertain payment terms/policies & hidden fees
4. Falsely invoicing a customer
5. Failing to offer numerous payment options to clients
6. A lack of digital backups or abandoning unpaid invoices
7. Depending on manual invoicing

Conclusion

Your invoice must include several elements and be presented effectively so that your client understands it and makes the payment as soon as possible. The good news is that you can easily create the perfect invoice with efficient online invoicing software.

You can buy the trial or try a free invoice generator before settling for the paid version. An invoicing software would simplify your job by providing estimates for the invoices, sending out automatic late payment reminders emails to clients, and allowing you to use pre-existing professional templates or create your own custom invoice templates for different invoices. Invoice/accounting software makes the invoicing process easier, cheaper, and less time-consuming.