5 minute read
An invoice is a document that contains the information about the services and products a business provides, along with the total amount of money owed. It establishes a commitment on the part of the customer to pay for all those things. So, the charges mentioned on an invoice must be approved by the responsible person or customer. Invoices usually outline unit costs, handling, shipping, and the terms of payment.
Purpose of invoices
Invoicing is essential for freelancers and small businesses because they are the legally binding agreements that empower organizations to get paid for their services. It serves significant purposes for both the parties sending the invoice and the one receiving it. It speeds up the payment process by giving customers notice of the payment that is expected or due. However, there are also some other purposes of using invoices.
It maintains the sale record
The main purpose of the invoice is to keep a record of all your sales. It helps you to find out when a product was sold, who got it, and who sold it.
It protects from fraudulent lawsuits
An invoice is the legal evidence of an agreement between seller and client on a set cost or price. So, it can protect the seller from fraudulent claims.
To record company income for tax filings
Recording and keeping up all the invoices helps the organization to keep track of their income and guarantee that it's paid all the amount of taxes.
To forecast future sales
It can help you to forecast future sales by gathering the information of customer’s popular products, buying patterns, identify trends, peak buying times, and more. So, you can develop powerful marketing strategies for your company.
A professional invoice will look simple, clean, and readable while providing all the details of the payment required. Invoiless is also one of those apps that can create asap invoices and helps to keep your business organized and get paid faster. It gives you a professional visual format for designing your invoices. However, it can fulfill all the purposes of an effective invoice.
What an invoice should include?
An invoice is used to offer details of exactly what has been bought and how the payment can be made. It is divided into three parts that are header, body, and footer. There are a few components that an effective invoice should include.
It is a unique number assigned by the seller to each invoice a business generates. It is a crucial invoice component because it allows a seller to easily distinguish this invoice from all other invoices.
It includes the date at which the product is sold and the invoice is generated. It’s usually present at the top section or header of the invoice.
Seller’s company information
The name of the seller and its company name with contact information should be included in the header of the invoice. In certain conditions, the business’s tax ID also needs to be included.
Client or customer’s information
The name of the company or person receiving the invoice should be included with their contact information, in the header of the invoice.
An invoice address includes the legal address of the client or the address where they receive correspondence. It is differentiated from the delivery address which is the address where services or items are to be delivered. Sometimes these addresses may be the same or sometimes may be different.
Detail of products
It should include the details of products like its name or describe services rendered or unit sold, the cost per hour or unit, the number of items bought or hours charged, and the total due for that particular product.
It should include the summary of all charges related to the services or items being charged that appears below the detail of products. However, sometimes it is present at the top of the footer section instead. Mostly, the footer of an invoice summarizes the total amount due by detailing any non-item charges, and it usually includes payment terms, additional comments, or special instructions.
Tax or any other dues, if applicable
Shipping charges, sales tax, and any other dues being applied are listed immediately below the total charges in the invoice.
It is the full amount owed by the client, including all the charges and applicable taxes. It usually appears below the total charges and other charges (taxes). It can also appear at the top section of the invoice for reference.
It usually includes instructions about where to send checks, any early payment discounts, what credit cards are accepted, or applicable late fines if the payment isn’t received by the due date. These instructions usually appear in the footer of the invoice.
Additional comments or notes
In certain conditions, it makes sense to add the date and mode of shipment or delivery. Sometimes business owners also want to include a special note to their clients on the invoice.
These are some key components that an effective and proper invoice must-have.
Nowadays online invoicing software makes it simple to create and send invoices. Online software is accessible anywhere, at any time you just need to have a smartphone or computer and a good internet connection. For example, Invoiless is also an asap invoice app that offers online invoicing with all the necessary details of services or products. Clients would be able to create professional invoices, send and track those invoices, before accepting web and mobile payments including the handling of credit cards. It can create free asap invoices that you can easily send to clients through email. With this, you can record payments, identify past receivables that helps you to analyze the different aspects of your business and its financial health.
The invoice is a critical business document that serves as legal proof. It is helpful to maintain the record of all the money transactions a business makes with its customers. So, invoicing doesn’t have to be difficult and should have all the necessary details.