If you’re a small business owner, your financial success likely depends on invoicing. Although it can be a drag, managing your invoices is easy if you have a go-to system. A template can make the process much more streamlined. Plus, adding some personal touches is a great way to make billing a marketing opportunity for your brand.
At Remitly, we’re invested in making sure you’re thriving financially. So here’s everything you need to know about managing your bookkeeping, plus some helpful examples.
The basics of invoicing
An invoice is a document that details a sale, whether of goods or services. It explains what was sold, how much it cost, and when the payment is due. Usually, an invoice is created by a seller and sent to the buyer.
If you’re a small business owner, invoicing is just a standard part of daily operations.
Importance of professional invoices
If you’re just starting out as an entrepreneur, you might think invoicing isn’t that important. At this stage, your client list is still small enough that you’re in contact with everyone regularly, and you can keep track of payments in your head.
However, setting up an invoicing system paves the way for your business to grow. It also shows clients you’re the real deal by projecting your professionalism. Here’s why professional invoices are important at any stage of business development:
- They formalise transactions: By documenting the sale of goods or services, you create a clear agreement with your customers to complete payment.
- They provide a historic record of sales: Invoices help you track your revenue, manage your cash flow, and prepare financial reports.
- They facilitate payments: An invoice provides customers with all the information they need to complete a payment.
- They create a legal paper trail: In case of disputes or legal issues, invoices can serve as a record of business agreements and sales.
- They optimise inventory management: Invoices are a good way to track inventory levels or provide insights on your most popular products or services.
The advantages of using a template
Using a template helps to simplify the invoicing process. It will also save you lots of time and ensure consistency. When your invoice lands in your client’s inbox, they’ll be familiar with what the document looks like.
Additionally, using an invoice template provides opportunities to include company branding, logos, and colours. This projects a recognisable image and supports your brand identity.
Free invoice template
If you’re developing an invoice template for your company from scratch, here’s an idea of what it could look like.
| Your Company Name
Your Company Address Your Company Contact [Phone, Email] INVOICE Invoice Number Invoice Date Payment items due [“on receipt”/due date] Bill To: Ship To: Contact Name Contact Name/Department Client Company Name Client Company Name Address Address Phone Phone DESCRIPTION QUANTITY UNIT PRICE TOTAL Item 1 $5.00 $5.00 Item 3 $7.00 $21.00 SUBTOTAL 26.00 DISCOUNTS 8.00 SUBTOTAL LESS DISCOUNT 18.00 TAX RATE 8.00% TOTAL TAX 1.44 SHIPPING/HANDLING 0.0 BALANCE DUE $19.44 Remarks/payment instructions: |
How to create an invoice
Creating an invoice is pretty straightforward. Use any program you’re comfortable with to create a template, which you can then customise for subsequent orders. Just ensure the final bill statement has all the information your customer needs to complete payment.
Essential elements of an invoice
- Header information: Include your business name and contact details at the top of your invoice. Also, provide spaces where you can write the invoice number, invoice date, and payment due date. Writing “due upon receipt” is typical if you expect an instant payment.
- Client information: Add information regarding the recipient of the invoice. If this differs from the person responsible for payment, include their information as well. For example, you might be delivering an invoice to a secretary or office administrator who is different from the client you signed a contract with.
- Itemised list of charges: Provide an itemised breakdown of the goods or services included in the transaction. A description of each item plus the quantity, cost per item, and total amount will be helpful to your client.
- Total balance due: At the bottom of the invoice, highlight the client’s total. You can also include any information about tax, shipping and handling, or discounts. The total balance should be formatted in such a way that it’s immediately clear and attention-grabbing.
- Optional information: You can also include comments, instructions regarding how to complete payments, terms and conditions, or a thank you message at the bottom of the invoice.
Writing an invoice as a private entity
Can you write an invoice if you or your client do not operate a registered or formal business? You can and you should. Although there’s no obligation to provide an invoice when conducting private business in the UAE, having one can be beneficial. An invoice formalises and creates a record of the transaction for both parties.
The format and elements of a private invoice are essentially the same as in a business invoice. Make sure to familiarise yourself with local tax laws, as there is typically an upper threshold for tax-free private income.
Customisable invoice options
Invoices are a great way to build and maintain your brand identity. Although most people don’t like receiving bills and payment requests, you can make the process more engaging by creating an invoice template that is colourful, customised, and reflective of your brand.
Personalise with your logo and client details
If you already have a business or personal logo that you use, incorporate it into the header of your invoice template. Your header can also utilise business colours and fonts.
By keeping these design elements consistent across your website, social media presence, contracts, and invoices, you’ll ensure your business is instantly recognisable to your customers.
Another best practice is to include your most relevant business details on the invoice. For example, you should add details about your website, online store, or social media profiles.
Editable line items and total price calculation
To make your invoice templates as streamlined as possible, include placeholders for information that will change with each client or order.
You can also use built-in tools—like the “sum” tool in Microsoft Excel—to calculate the subtotal and total due automatically.
Small business invoice tips
Unless you work for a large company, you’re probably wearing multiple hats as an entrepreneur. Having a standardised, go-to invoice template is one way to make your life easier. You can also leverage different tools to automate or support your invoicing process.
Streamline invoicing with free tools
All of the tools below are free to use and will help you develop your invoices or accept payments from customers.
- Canva offers free invoice templates you can personalise with your brand’s logo, graphics, and colours.
- Microsoft also has a range of different pre-made invoice templates.
- Zoho Invoice is a software that simplifies invoicing. The best part? It was specifically developed for small businesses.
- Money transfer services like Remitly are a great resource for small business owners. You can create digital invoices and receive payments internationally through such platforms.
- Square also offers invoicing software and provides customers with multiple ways to complete payments.
- Wave is invoicing software that’s focused on making your business look professional and automating repeat processes.
Avoiding invoicing pitfalls
As you start invoicing clients and customers, you’ll want to avoid some common mistakes that complicate the payment process. Eliminating these pitfalls will ensure clarity for your clients and optimised operations for your business, as you receive your payments in a timely manner.
- Skipping reminders: After sending an invoice, your work isn’t done until you receive the payment in full. There are plenty of reasons why someone might not fulfill an invoice. Often, people are just forgetful, so send reminders at regular intervals until your client completes the payment.
- Missing or incorrect information: Clients will use the information you provide on an invoice to complete payments. Ensuring that information is complete and accurate will streamline the payment process.
- Unclear terms: Every invoice should include a specific due date that is both clear and unequivocal. Communicate the terms of payment using simple, concise language.
- No late fees: To create a sense of urgency for your clients, consider building late fees into your invoicing process.
- Lack of payment options: Providing customers with multiple payment options will allow them to pay using a method that is easy and familiar to them. Consider offering options like credit and debit cards, digital money transfer platforms, cheques, and online banking options.
- No branding: Let’s be honest, most clients will probably glance at a bill and focus on the total amount due. Your invoices should be immediately identifiable as related to your business. This will help clients automatically recognise the payment.
- Inconsistent invoicing: Sending invoices randomly can confuse your clients. Instead, forward bills on a specific date, like the first of the month, or within a regular time frame, like the day when business is completed.
Explore more templates and options
Whether you work a blue-collar job or in an office setting, you can create an invoice template that reflects your professionalism and pride in the job. The internet is a great resource for industry-specific examples, or you can reference invoices that you’ve received as a customer yourself.
FAQs
When should I send an invoice?
The two most common types of invoices are sales invoices and service invoices, both of which are sent at the completion of a transaction. But you can also send proforma invoices, which confirm an order before items are shipped or services are rendered.
What is invoice reconciliation?
Invoice reconciliation is the process of matching up invoices you’ve sent out to payments you’ve received. It’s important to perform invoice reconciliation regularly, especially as your business grows. This ensures that you’re paid fully and on time for the work that you’ve done.
I waited too long to send an invoice. What now?
Send the invoice. If you’ve delivered on a contract, send the invoice and expect your client to pay. It’s important to remember that money is earned through your work, not through the invoice itself. That being said, sending invoices in a timely manner shows professionalism and respect for your work and the client. So, don’t make late invoicing a habit.