Invoices play an essential part in the condition of just about any business. They have become even more essential as more and more people turn to freelancing.
An invoice is a commercial document that itemizes and records a specific transaction between a buyer and a seller. For example, some artists might be offered commission work. A client will contact them, and the artist will draft an agreement describing what they will create and by what date.
When the job is finished, the artist will send the invoice to the client to request payment. These invoices are critical to having healthy cash flow and complying with accounting and internal controls or audits. Artists can also leverage an art commission invoice template and create a more efficient billing workflow.
Each invoice typically outlines the payment terms, time to delivery, details of the project, time for its completion, and any other items discussed between the client and the person offering goods or services.
Fundamental Aspects of an Invoice
An invoice must state what it is on the face of the bill. This will typically include a unique identifier known as the invoice number which is useful as an internal and external reference. The invoice should also contain contact information for the seller or the service provider in case there are any questions.
The invoice should itemize each service and product, the total amount of items or services purchased, the handling of the processes, shipping (if applicable), and the associated taxes that need to be paid.
Payment terms, any credits offered for early payment, and changes for late payments are also explained.
E-Invoicing and Its Benefits
With the strength and global availability of the internet, individuals and businesses find it much easier and more convenient to rely on electronic invoicing instead of physical paper documents and snail mail. E-invoicing, such as that offered by Invoice Ninja, is essentially electronic billing that can generate, store, and monitor any transaction-related activity between parties and ensure that the initial agreements’ terms have been fulfilled.
Invoices created digitally have numerous benefits, such as being easily searchable. Anyone can digitally find specific names, terms, or dates and print or reproduce the invoices on demand. They can also be used in data collection and business intelligence and reduce paper usage.
Invoices are used as a means of tracking accounts receivable, incoming revenue, and sales or assignments that have been completed. They typically include when a specific service or product was sold and delivered, as well as when a project has been completed.
This data plays an essential role when it comes to the maintenance of accurate financial records.
Whenever a person who offers specific services or goods uses a professional invoice, they have access to a document that can legally protect them from potential unsubstantiated lawsuits. Customers will pay an unsigned invoice without any issues. However, for the invoices to be legal documents, they need to have an official signature acknowledging that the items were accepted.
If the invoice is signed by both the seller of the product or service and the buyer, then there is evidence that both understood the business terms and agreed to abide by them.
Business Analysis Use Case
Invoices are a record of any sales made and contain a wide range of valuable information, such as the unit prices of goods or services, the total amount and dates of the transaction that occurred, and other important data.
They help individuals and businesses obtain insights into the buying patterns and habits of their clients, which can help them better manage their time if they are offering time-sensitive services, and help them manage their inventory and forecast potential future demand for the products that they are creating.
Businesses or service providers can send a paid invoice to memorialize for their clients that they received their payments.
Making the Right Invoice for Your Clients
Whenever clients receive an invoice, they receive a bill after the service they requested or a product they ordered has been fulfilled. If a customer purchases something without immediately making a payment, they will get an invoice from the supplier and need to make the payment at a later date.
The invoice, in this case, is issued to collect payment from the customer or client. When paid, it becomes a sales receipt document with proof of the payment that a customer made to a seller or provider.
Receipts then get used as documentation or record that confirms that a customer has received the goods or services that they have paid for.
Looking for free painters invoice templates? Invoice Ninja has you covered!