When starting a small business or freelancing for the first time, you might not be fully acquainted with some of the invoicing terms, what they mean, and what you should include on your client invoices to ensure you get paid on time.
To help, here are 15 key elements to include on your client invoices, along with brief descriptions of what they mean and why you should include them.
1. Include the word INVOICE
Clearly mark the document as an invoice near the top or in a prominent position. There should be no ambiguity for the client about what the document is for – i.e., it’s a request for payment from the seller to the buyer. It’s not to be confused with a receipt, credit note, or purchase order. Making it crystal clear from the outset mitigates the risk of late payment.
2. Name and address
This includes your business name and address, as well as the client’s name and address. You should also include contact details, such as a phone number, email address, etc. And ensure it is addressed to the right person and department.
Note that the address you send your invoice to may be under a different project name or business address, or the accounts department may be in a different location, so make sure you check before you send it. If you are emailing the document, again, ensure you are sending it to the right person.
3. Invoice number
An invoice number is a unique identifier and, in some countries, is mandatory. It’s highly recommended that you add an invoice number for tracking and record-keeping, for tax and accounting purposes, and to avoid errors.
4. Payment terms
You should include your payment terms. This can consist of the invoice due date and any conditions. For example, if your payment terms are Net 30, the payment is due 30 days from the invoice date. You can also include early payment incentives, late payment fees, shipping fees or discounts.
5. Late payment
If you have a late payment policy, include it on the invoice. If you are including a late payment fee on the invoice, clearly state it.
With the Invoice Ninja Pro Plan, you can set up invoice late fees that apply automatically when invoices pass their due dates. These can be as a percentage of the invoice or as a flat monetary amount. Find out more here.
6. Discount
If you offer a discount, you should clearly show the discount and rate on the invoice. Again, with Invoice Ninja, you can easily enter a discount amount to apply to the invoice, either as a percentage or a flat monetary amount.
7. Taxes
These can vary depending on jurisdiction. In some countries, value-added tax (VAT) applies, whereas in the US, sales tax depends on the state and the nature of the product. With Invoice Ninja, you can configure tax rates using manual or automatic tax calculations. You can set up total taxes, line-item taxes, and localize for your region. Find out more here.
Where applicable, you should include tax ID numbers.
8. Invoice date and invoice due date
The invoice date and invoice due date can be the same, but in practice, the invoice date is usually the date of issue (when the invoice was created), whereas the due date is the date on which the invoice is due to be paid.
As always, it’s important that it’s absolutely clear exactly when the invoice should be paid.
9. Description
It’s important to provide a clear description of goods or services rendered, and if applicable, the dates and any other information pertinent to the invoice.
For example, in addition to a description, you may need to add a cost centre (or cost code), refer to a purchase order and name the person or department who requested the services or goods. You should also provide a breakdown of costs. For example, if you are a service provider that charges by the hour, then you should state the number of hours worked, the hourly rate and the relevant dates.
10. Unit cost and quantity
The unit cost is the cost per unit of goods or services. For example, one widget might cost $5.00, then you multiply this amount by the quantity sold. So, if you are selling 10 widgets at $5.00 each, that’s a total of $50.00, which will be entered as the amount due for this line item.
11. Line item
The line item on an invoice is a single entry for a specific service or product. So, if you are selling 10 widgets and also an additional product, the additional product will have a separate line item entry.
12. Total amount due
This is the total amount due after applying any discounts, adding any fees or taxes, etc. The total amount due should be clear to avoid errors or misunderstandings. This is not to be confused with the subtotal, which is the sum of line items before you’ve applied any taxes, shipping costs, discounts, etc.
13. Payment method
In addition to the due date and amount, another important detail to include is the method of payment. For example, via a bank transfer, online payment gateway, credit/debit card, check, cash, etc.
If you want your invoice to be paid fast online, you’ll need invoicing software that integrates with a payment gateway. A payment gateway is the tech that allows your clients to pay you securely and swiftly online.
Invoice Ninja integrates with some of the world’s most popular payment gateways to facilitate fast online payments, and you can even get paid in Bitcoin. Check out all our payment gateways here.
14. Your branding
If you have a logo, add this to the top of the invoice to make your invoice look professional and instantly recognizable. Invoice Ninja offers free, attractive, professional invoice template designs you can customize with your logo and brand colors. Check them out here.
15. Notes
Here, you can add additional information relevant to the transaction, such as thanking the client for their business or adding a promotional code for future purchases.
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Invoice Ninja is a leading free invoicing software and offers an incredible range of small business and freelancer-friendly features to help you get paid hassle-free and fast. You can try Invoice Ninja for free at the link here.
