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What Is an Invoice?

An invoice, also known as a sales invoice, is a document that businesses or individuals issue to customers to request payment for goods or services. A good invoice template should include a space to display a clear total and specify the length of time that the customer has to pay for the invoice.

Difference Between an Invoice and Bill

The word "invoice" is usually used in business environments to refer to the payment request they send their customers. When the customer receives that invoice, they often refer to it as a bill that is owed. These two terms are commonly used interchangeably since both refer to itemized statements that a seller gives a buyer.

Most Popular Types of Invoices

There are several different types of invoices that a business can send:

  • Standard invoice: A standard invoice is the most common type and includes all of the basic information, including the contact information for the business and buyer, the invoice number, the date the invoice was sent, an itemized list of purchases that the seller made, and a clear total for the price of all goods and services.
  • Recurring invoice: This type of invoice is sent each month on a recurring basis. It often contains a fixed price for the goods and services that the buyer is regularly using. In some cases, it can also contain variable prices depending on usage or other factors. Examples of this type of invoice include cell phone business, rental properties, or business software.
  • Shipping invoice: A shipping invoice includes the cost and quantity being shipped for each item. It also includes the cost of shipping fees and taxes and a subtotal for those charges along with the cost of the goods. Like all invoices, a shipping invoice includes the contact information for the buyer and seller, an invoice date, and the number for the invoice.
  • Commercial invoice: This type of invoice is used when goods are being sent across international borders. It has all of the elements that you would see in the standard invoice, as well as other information necessary for customs, such as the country where the products were manufactured, what the items are for, the Harmonized System codes if the seller knows them, the total weight of the goods, the number of packages, and the reason they're being exported.
  • Pro-forma invoice: This type of invoice is different than the others in that it's not actually a request for payment, but instead an estimation or quote for what the seller believes a product or service will cost. Sending a pro-forma invoice is often a first step for negotiating a payment agreement. It can also be used as evidence of the value of the transaction in order to secure financing for it. However, it's not actually a true invoice since no payment is requested.

How to Send an Invoice

There are a couple of different options that companies have when sending an invoice to customers, including:

  • Electronically: When customers send invoices electronically, they can either send it through a website or via email. Many companies use accounting software that allows the business to quickly generate an invoice and send it directly to the customer's email address. This is often the preferred method for sending invoices, as it delivers them to customers in real time. This method of sending invoices often allows customers to pay the invoices electronically as well.
  • Postal service: This is a slower method of sending an invoice, although some businesses still use it to accommodate the preferences of their customers. It's important to keep in mind the time it will take for the invoice to reach customers and the time it will take for the invoice to get back to you when you're putting a due date on it.

What Is an Invoice Template?

An invoice template is a document layout that makes it easy to replace default information with specific details for your business. It also provides the necessary fields that make it easy to fill in itemized information about the goods and services, including the price, quantity, shipping, and taxes.

Benefits of Using an Invoice Template

Using an invoice template is beneficial because it does the following:

  • Gives you the ability to save time by having a basic invoice that is already customized with your business information
  • Ensures you don't overlook information that should be included or updated on every invoice
  • Creates a standard, branded look that you can use for every invoice, making them instantly recognizable by customers
  • Shows a level of professionalism and emphasizes that the document is a record that should be kept
  • Makes it easy to calculate the subtotal and the grand total for goods or services rendered
  • Allows you to easily add messages promoting other products and services or thanking customers for their support

What Goes on an Invoice?

While invoices can be customized with additional information added, there are several sections that should always be included in the invoice:

  • Title: In most situations, every invoice should be clearly marked with the word "invoice" so it's immediately apparent to the recipient what the document is.
  • Invoice number: This number is unique to every invoice and should change sequentially for each one you send.
  • Date: This is the date that the invoice was created on. This is what the business and customer will refer to when they track the date that the payment is due.
  • Contact information: The invoice should always include the name and address for both the invoice and the client. Though an address may not be necessary in every case, particularly in invoice and payments are sent and received electronically, it can be good for your business to have this information for record-keeping purposes.
  • Contact names: The invoice should include the names for contacts within the business that's selling the goods or services and the contact name for the business or individual making the purchase.
  • Description of goods and services: There should be a description of the service of goods that the customer is buying.
  • Quantity and price: There should be a price per unit listed, as well as the total number of services or goods that are being sold.
  • Subtotal: The invoice should clearly state the subtotal for the goods and services before taxes are added.
  • Total: There should be a total amount owed to the business, which will be a number that's usually listed at the bottom or under the taxes and shipping costs.

What Is an Invoice Number?

An invoice number is a unique number that's assigned to each new invoice created. These numbers are used to keep track of the invoices you send and are usually recorded in the business's bookkeeping system. The invoice number should be assigned in sequential order.

Invoice Templates to Download

Here is a list of templates you can download for yourself:

Invoice templates are professionally formatted, printer-friendly, and fully customizable. That makes it easy for businesses to update them quickly and get them out to customers in a timely manner. Invoice templates can also be designed specifically for your company, allowing you to highlight your company's branding, including its own personal headers, footers, colors, and logo.

You can even add client-targeted messages to your invoices, thanking your customers for their business, suggesting additional services or products that they may be interested in purchasing, or adding other relevant information.

Ultimately, an invoice template provides a professional, easy way for you to request payments from your customers. If you need help creating an invoice template for your own business, contact Contracts Counsel today. Our vetted lawyers work in over 30 industries and are happy to help you create an invoice template that's customized for your own business.

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Invoice Template

Texas

Asked on Mar 30, 2021

What should I include on my invoices?

I have a template I downloaded off of the internet and am looking to confirm I have everything in it that is needed.

Donya G.

Answered Mar 30, 2021

Rate, hours worked and a detail of the work completed. DISCLAIMER The answers to these questions do not constitute legal advice and does not create an attorney-client relationship with the attorney and anyone who reviews these responses.

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