As your business starts to grow, collecting money from customers becomes increasingly complex. This is why it’s important to follow a standard invoice numbering practice–otherwise, you will end up spending a lot of time sorting between different invoices.
So, before generating your next batch of invoices, be sure to read this article to understand the different ways invoice numbers can be generated and how the best free invoicing software from Invoice Ninja can automate the process for you.
Types of Invoice Numbers
Sequential Invoice Numbers
Sequential invoice numbers follow a numerical sequence. This means that you start from one and move one number up with each invoice. For example, if the first invoice has the number 1, the second will have the number 2, and so on.
People usually add nine zeros in front of a sequential invoice number (like 0000000001). This appears to be more professional than just 1. Plus, it allows you to include more information in the invoice number, such as the date, if you’d like.
Chronological Invoice Numbers
Chronological invoice numbers are very similar to sequential numbers; the only difference is that adding the date is mandatory. Your invoice number will look something like ‘20230130-001.’
The first four digits are the year, the next two digits are the month, and the following two digits are the date. A dash separates the date of the invoice from the invoice number, so the format is YYYYMMDD-001.
You can also shuffle the date format to suit your convenience. For example, you can place the month first, which will make the invoice number look something like MMDDYYYY-001.
Project-Based Invoice Numbers
As the name suggests, this type of invoice number generation adds a project number to the invoice, which helps you know which project the invoice belongs to. This is an ideal method for businesses that deal with multiple projects.
Typically, the project number comes first in the invoice number, then comes the customer and sequence numbers. The resulting invoice number looks like ‘YHYT255-0001-01.’
You can also write the customer number first and then the project number–it should look like ‘0001-YHYT255-01.’ Whichever format you choose, the sequence number will always stay at the end.
The main aspect of generating this kind of invoice number is to create an easy-to-remember project number. You will have to decide what each letter or number in the project number should denote. It’s best to make a chart of these meanings that you can refer to later on.
Customer-Based Invoice Numbers
Customer invoice numbers are simple and much easier to track than the options discussed above. They only include the customer number and the sequence number and look something like ‘0001-001.’
If you want to make the invoice ID more comprehensive and informative, add the date between the customer and the sequence number. The date format, again, depends on your preference. You can go with:
- YYYYMMDD
- MMDDYYYY
- DDMMYYYY
This will make the invoice number lengthy, but not complex. For example, if you generate the invoice on January 30th, 2023 for your fifth customer of the day, the number should appear like ‘0005-20230130-005.’
How Does Invoice Ninja Generate Invoice Numbers?
With Invoice Ninja, you can add a wide range of variables to your invoice numbers. Simply go to ‘Settings’ > ‘Generated Numbers’ > ‘Invoices’ to tweak the number pattern. Attributes that you can add to your invoice numbers using our invoicing tools include:
- Client number
- Year
- Date
- Staff number
In addition, there are two ways to generate invoice numbers with Invoice Ninja: ‘When Saved’ and ‘When Sent.’ The problem with the ‘When Saved’ setting is that if you fail to close a sale or you lose a client, the invoice number you generated goes to waste and can mess up the sequence.
To avoid this, select ‘When Sent’ as your default setting–this ensures that the invoice numbers are generated only when the invoice is sent to a customer. You can toggle this by going to ‘Settings’ > ‘Generated Numbers’ > ‘Invoices.’
Of course, an invoice number isn’t the only thing an invoice needs–be sure to check out our post on what information should be on an invoice to create professional and error-free invoices so that you get paid on time!
