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Create an invoice that is accurate: 12 ideas

Article provided by Xero

Invoices tell your customers a lot about your business. So your invoices should be professional, well designed and accurate. Here is how to create invoices that your customers will notice – and pay quickly.

Make an impression

Every invoice you generate sends a message about your business. When your customers receive your invoices; they will form ideas about your organisation.

A poorly-designed, inaccurate invoice says that your business is disorganised and badly run. But an accurate, well-designed, professional invoice speaks volumes about the quality of your company.

So invoicing isn’t just about requesting payment for products or services. It’s also an extension of your company’s branding and marketing efforts.

For these reasons it pays to make sure your invoices are professional looking. It’s even more important that they’re accurate. In this guide we’ll look at how you can achieve all this.

1. Get the numbers right

If you strip away the detail from an invoice, what’s left is a demand for payment. It’s a piece of paper or an electronic document that’s asking your customer for money.

So the first point to consider is the amount of money you’re requesting. It has to be correct every time. If you send out inaccurate invoices you probably won’t be in business for long. Your customers will be unimpressed:

  • If you charge too much they’ll assume you’re acting dishonestly.
  • If you charge too little they’ll suspect you’re incompetent.

Neither option is good! So get the numbers right. There are three main steps to this:

  • Track your hours or product sales accurately. Time-tracking software and Point of Sale (POS) tools will help here (read our guide to retail POS). Ideally they should connect directly to your accounting system. Then you won’t have to enter the same information twice.
  • Create an invoice that has accurate numbers. With good accounting software this will be easy. You’ll be able to quickly generate an invoice using the sales data you’ve already collected.
  • Invoice in good time. Don’t wait months between invoices, as people’s memories fade. If you let too much time pass, your customer may have forgotten some of the work you did. If they believe you’re charging too much, it will have a negative effect on your business.

These three elements are vital to the invoicing process. Get them right and you’ll have the basics established. But that’s just the start.

2. Invoice regularly and often

Invoicing is something you should get into the habit of doing. It’s a core part of your business, and you should treat it as such.

Your cash flow depends on the efficiency of your invoicing process. If you wait until the end of every month before invoicing, you’re wasting time. You are also losing money.

Get into the habit of invoicing as soon as you finish a piece of work or make a sale. Good accounting software will do this for you. You can automate most of the invoicing process, saving you time and money.

This will also help your customers. They have probably budgeted to pay you within a specific time. Invoicing promptly will help them keep their accounts in order too.

3. Choose a delivery method

Some companies still like to receive paper copies of invoices. But this situation is changing fast.

There’s little point in shuffling pieces of paper around and stamping them with dates of receipt and payment. The modern alternative is much simpler. Electronic documents can be:

  • moved around faster
  • processed more easily
  • archived without taking up any space
  • indexed and searched quickly.

Ask your customers how they would like to receive their invoices. But make it clear that you’d prefer to send them electronically. This will save you time, and can be done from within your accounting software.

It will also save you money on paper, printer consumables, envelopes and postage. In addition, electronic invoices arrive faster. You can even get notification of when your customers have opened them.

Invoices tell your customers a lot about your business. So your invoices should be professional, well designed and accurate.

4. Create an invoice that’s beautiful

You wouldn’t necessarily associate the word ‘beautiful’ with something as basic as an invoice. But there’s no reason why your invoices should just be dull tables of numbers.

If you’re not a graphic designer, don’t worry. You won’t need that kind of skill. Quality accounting software will have a range of built-in invoicing templates.

This gives you a choice of beautiful designs you can use. It will ensure your invoices make a great impression when they are received. All you’ll have to do is add your branding. Which brings us to the next point.

5. Personalise your invoices

Accounting software invoice templates look great. But they’ll look even better once you’ve added your business logo and branding.

Again, you shouldn’t need the help of a graphic designer to create an invoice that matches your brand. You probably already have your own logo, and this will be stored somewhere as an image file. Import that image into your accounting software and you’re done.

It doesn’t matter whether you’re a retailer, manufacturer or service provider, a personalised, beautiful, professional invoice will help your business stand out.

6. Avoid unpleasant surprises

An invoice should never be a source of surprise for your customers. Some businesses forget this important fact.

For example, let’s say you’ve agreed to a fee for providing a service or product. Due to circumstances beyond your control, the price has to be increased later, to cover your costs.

When it’s time to create an invoice, don’t simply change the price without talking to your customer first. Whether you supplied an estimate or a quotation, your customer deserves an explanation.

A professional invoice should contain only the agreed figures. Unexpected surprises will anger your customers.

7. Include all your business information

An invoice is a formal document and it should contain all the necessary legal information. The requirements vary from one country to another, but it’s wise to include:

  • contact person
  • company name
  • registered business address
  • company registration number
  • contact phone number
  • contact email address
  • invoice date
  • invoice number

8. Use a sensible invoice number

The invoice number can be whatever you want it to be, as long as it’s unique. However, it makes sense to use a logical system.

For example, you might assign a customer number and an individual invoice number, then add the date. Let’s say the customer number is 1340 and the invoice number is 0003. If the invoice was created on 12 June 2015, the number might be 1340-0003-150612.

This will help you quickly and easily identify invoices just from their numbers. It makes sense to give the invoice document the same filename, too. Again, this will help you quickly identify the file when it’s needed.

Your accounting software should allow you to configure your invoice numbering system. It will also have suggestions that might suit your particular type of business.

A logical invoice numbering system will also help you if you’re ever audited. It will demonstrate that you take invoicing seriously.

9. Include your customer’s details

Make sure the customer has everything they need in order to process your invoice. Don’t assume it will automatically land on the right desk – or in the right inbox. You should include:

  • name and job title of recipient
  • company name
  • company address
  • their reference number, if applicable
  • their purchase order or sales order number

10. Itemize the work done

This is the important part. You need to clearly state what work was done and how it is being charged. Luckily, good accounting software can handle this for you, and will provide line items for each entry. For example:

  • services performed
  • dates during which services were performed
  • hours worked
  • quantity of items supplied
  • rate per hour or item
  • amount
  • sub-total
  • tax amount
  • total

These are just examples – your own invoices may include different items. Talk to your accountant if you have any doubts about what to include.

11. Add payment terms and a sensible due date

Your invoice payment terms tell your customers when (and how) you expect to be paid. This is an important part of every professional invoice.

12. Be polite

An invoice is a communication between you and your customer. Since you want to retain your customers, you should treat them with respect. So be polite on your invoices. Include a note at the bottom, such as, “Thank you for your custom. It is very valuable to us”. Create an invoice system that works for you.

If you follow these 12 steps, you’ll be able to create and send invoices that work for you. Your invoices will look professional and they’ll contain all the required information.

Most important of all, they will help you get paid – fast.

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