What Should an Invoice Include? 13 Essentials for Every Small Business Invoice

Invoices have existed for centuries, and once you set up a business, you’ll issue an invoice requesting payment for goods or services sold. Although they have evolved with time, their purpose remains unchanged: how an individual or business requests payment for services or goods offered. 

Businesses must generate revenue to continue operating, and the only way to receive these payments on time and in full is vital. The first step to ensure you get paid is creating an invoice and sending it to the customer. 

So, what should an invoice include? An invoice is an official document, meaning its content is regulated by law and should be written in a certain way. 

Invoices also offer legal records of transactions that are essential for accounting and record-keeping purposes.

If you’re new to invoicing, stick around as we tell you more about invoices. Our guide will answer these questions: what should an invoice include? Are there different types of invoices? 

What is an Invoice?

An invoice is a formal document issued by a seller to a customer requesting payment for goods or services rendered. Some of the details an invoice must contain includes: 

1. What was sold 
2. Total amount due
3. Invoice number
4. Service or product details
5. Payment terms and methods and 
6. Due date

Typically, businesses send invoices to ask for payment. The document is also used for accounting and auditing; thus, every company must have good record-keeping practices for clearance purposes. 

What Should an Invoice Include? 

Invoices must contain many details, as we’ll discuss below. An invoice must be completed to avoid delay in payment, so 13 essentials are required for every small business invoice. Unfortunately, issuing incomplete invoices will delay your payment and display you as a non-professional. To avoid any issues arising from incomplete invoices, ensure your invoice includes these details.

1. The Word INVOICE at the Top

Before adding any details to your invoice, ensure the word “INVOICE” appears at the top of the page. The sight of the word tells the recipient it’s an official document. It confirms the sale of goods or services and the total amount due, distinguishing it from other documents. 

2. Make it Simple

You seek payment from a customer and, and need to provide only details related to the transaction. Hence, you need to keep your invoice simple to the detail. Your invoice should be clear to the client at a glimpse. They should always understand it and read through the necessary information. Don’t extend the document layout for no reason and make it as short as possible. If your client struggles to decipher the invoice, they might put it aside, resulting in payment delays. 

3. Invoice Number

Each invoice should have a unique number for identification and filing. The numbers must be in a sequel that doesn’t break. You can make the invoices unique using a series of numbers, especially if the issuer is a large company. Each series can contain unique numbers, items sold, and trading platforms. 

Numbering invoices improves record-keeping, makes it easy to identify records, facilitates payment, and tracks your company’s revenue streams. Whatever approach you decide to use in numbering your invoices, be consistent to avoid confusing yourself, the client, and your accountant.

4. Business Name and Contact

Don’t assume the client knows where the invoice is coming from. Although it may seem obvious to add your business’s legal name, contact information, and address ensure it’s clearly displayed on the invoice. 

Ensure you also include a phone number, email, and point of contact so customers can easily reach you if they have any questions. You can include this information on a company logo to reinforce a sense of professionalism and branding. 

5. Branding or Business Logo

Invoices go beyond paper with payment details; if they are well-structured, they can be used as a communication strategy. Ensure your invoices align with your business logo, the company’s general branding and marketing strategies. 

The invoice should look like a natural part of an ongoing communication with the client, and you can make this happen by using free invoice templates online. 

Using your business logo is an integral part of your invoice as it makes it stand out, and your customers can quickly identify it from others. Featuring your business logo on your invoices isn’t obligatory. There are no rules on where to position it, but it’s a marketing tactic you can capitalize on. 

The placement of the company logo is also something you should think about. Business logos placed on the left-hand side are more likely to draw the reader’s attention than those on the right.  

6. Seller’s Information

As the seller, your information should be displayed on the invoice bearing the following details: 

• Company’s full name
• Company’s address
• Company’s email address
• Company’s phone number

Providing the above details makes it easy for the customer to know where the invoice comes from. Customers can also address any concerns they might have. With your information, it’s easy to contact you, track down the purchase, and encourage them to pay promptly. You risk late payments without providing your company details, which can affect business operations. 

7. Customer Information

Although you know who you’re invoicing, you must include their information (customer details) on the invoice to ensure it goes to the right person or company. Providing the customer’s address is crucial for legal purposes, accuracy, compliance, and efficiency in payment processing. 

You might also have to include the purchase order number on the invoice as crucial information to what you’re paying for. Large companies mainly issue a purchase order number with complex accounting systems, and quoting it on your invoice makes it easy for the customer to forward the invoice to the correct department for payment. When paid from a specific department, tracking the expenses is easy, as no mistake or confusion can delay payment. 

8. Invoice Date and Payment Due Date

When writing an invoice, it must have the current date of issue, purchase date, and payment due date. Including relevant dates gives the seller and customer a reference date for the transaction. 

Larger companies may have timelines for paying invoices ranging from 15, 30, or even 60 days after receiving the invoice. If you have customers like those, ensure that your due date falls within your customer’s payment timelines to avoid inconveniences. Having the correct dates on your invoice will allow you to track outstanding invoices and follow up with those who don’t pay on time. 

9. Product or Service Description

Ensure your invoice has a short description of the services or products sold. If your client understands the invoice quickly, they will likely pay faster. For instance, if you offer catering services, don’t just mention catering services but also provide details of the event and the occasion on your invoices. Provide short information about your services to justify your pricing and the invoice so it can land in the correct department.

10. Quantity and Prices

As you list the products or services you rendered, don’t leave out the quantity and unit price for each item. Provide details of the products you sold, the price, and the hours you served the customer. If your services are charged by the hour, ensure you indicate the hours you worked, the hourly fee, hours served, and the total amount they owe you.

11. Unique Message and Bank Details 

Provide your bank details to the customer to increase the chances of getting paid quickly. List all bank details to give the client a choice of payment method. Add a unique thank-you message for the client to feel valued. 

Today, there are so many ways a client can pay you: bank transfer, wire transfer, or a QR code. So, you should ensure you have different options for their convenience and yours. If you’re open to receiving digital payment, include a clickable button for them to make the payments. 

Even with all the details an invoice should have, it should be brief and end with a unique thank you note to the customer: thank you for allowing us to serve you. It was a pleasure working with you. Feel free to send a short but unique message to make the client glad you served them. 

12. Tax and Discounts

The taxes and discounts (if any) you offer the client should be in the invoice. Although there’s no national sales tax in the US, don’t forget your state tax laws and federal laws to ensure you calculate the taxes right, missing nothing.

Your tax calculations must be accurate because overcharging or undercharging a customer can bring complications. For instance, if you charge a customer higher taxes, they must pay the amount indicated on the invoice. 

There are penalties you can face for undercharging a client. Thus, you must be aware of the taxes your client should pay to avoid inconveniences and issues with the IRS.

Besides taxes, list the discounts you’re offering the client. The discount can also be an incentive to get paid quickly. You can offer varying discounts for different payment dates, and clients will surely rush to beat the discount timelines. 

13. Payment Terms and Method

Be clear on the invoice how you’d like to receive your payment. Don’t forget to inform your client of the events that might follow if the payment isn’t made promptly. 

The terms should clearly state any applicable fees a late payment will attract to ensure understanding. Plus, we have different payment methods in place to allow clients to choose what best suits them and ensure timely payments.

Types of Invoices

Invoices are issued to get payments from customers. Depending on the reason for issuing the invoice, there are different types a business can use. Some of the reasons for issuing an invoice will depend on: 

1. The type of transaction
2. Legal Requirements
3. Specific business needs

For a business to receive accurate, timely payments and ensure seamless transactions, using the proper invoice will suit your business. Here’s a list of the most popular invoices enterprises use. 

1. Standard Invoice

A standard invoice is close to a regular sales invoice as it provides the details of a purchase. They include date of purchase, date of issue, list of items purchased, the total amount due, and how to make the payment. This type of invoice often has a simple and flexible format that fits most industries. 

A standard invoice is a sufficient document for most businesses to request payments for the goods or services purchased by the customers. The invoice is also legal proof that the transaction was completed. In addition, the seller may also provide a receipt of payment to confirm the transaction. When is a standard invoice used?

• To collect payment from a buyer
• A follow-up for payment after offering a service or delivering goods 

2. Past Due Invoice

A past-due invoice is like a standard invoice, only that it’s past the payment date. The invoice is sent as notice past the due date when the client doesn’t pay the final invoice. Once a client misses an invoice payment due date, send unpaid invoices to them as soon as possible. Past-due invoices indicate all the service and payment details as listed on the final invoice and any additional fees the late patent may attract. 

3. Final Invoice

A seller issues a final invoice to a client as a request for payment after a project is complete. It has more details and the following information should be included: 

• A list of all goods or services delivered
• Amount due for the project
• Invoice number
• Payment due date
• Accepted payment methods 

4. Commercial Invoice

International traders mainly use commercial invoices to export or import goods. The commercial invoice is what is collected for payment from abroad. Custom agencies also use the invoice to verify import duty and tax on imported goods. 

Typically, a commercial invoice indicates the final prices for the imports, including all related fees and any other details customs authorities may need. Thus, when creating a commercial invoice, you must know what details to include, as a single mistake can cause delivery delays. 

Some countries require a commercial invoice for all imported goods, and failure to produce it can lead to customs holding the goods or returning them to the sender. International traders use commercial invoices to ship goods and comply with international law.

5. Proforma Invoice

A proforma invoice is like an introductory invoice a seller sends to the buyer before goods or services are delivered. The invoice contains the purchase details, products, cost estimations, and logistic information. 

The invoice acts as a confirmation document for an order. It also allows the buyer to review the purchase and negotiate terms of sale and costs where possible. It’s a way for the buyer and seller to communicate and ensure they mutually agree before the final transaction.

International businesses can also use a proforma invoice to get estimations for import duties and customs purposes. A proforma invoice differs from a commercial one because it’s not a formal document, meaning it’s not legally binding. The proforma invoice is used in these situations: 

• Confirmation of a large order
• Declaring an import or export value to customs
• Sent as a proposal on a bidding project
• A company working with a client abroad can send this invoice to the client before actual work begins

6. Interim Invoice

An interim invoice is used to bill large projects that are paid in multiple payments. The client and seller must agree to the terms of payment. The seller (company or freelancer) will issue the interim invoice seeking payment when a milestone towards a more extensive project is complete. Interim invoices are ideal for small businesses working on a project for a long time. 

7. Credit Invoice

A credit invoice, memo, or credit note is issued by a business to offer a client a discount. It can also be sent to a client to provide a refund or correct an error in a previous invoice. The total number on a credit invoice is negative. A credit invoice is used when:

• There’s a favor to do for the client, like order delays, missing goods, or damaged goods.
• The client has overpaid for goods and has to receive the excess amount.
• A client pays for the total goods, but a discount needs to be applied.

8. Debit Invoice

A business issues a debit invoice, memo, or debit note to a client to raise the amount a client owes the business. Startups or freelancers use debit invoices to make slight changes to an existing invoice. Thus, the total amount will be positive. A debit invoice is used in this scenario:

• The customers increase their order
• Extra charges from a miscalculation of taxes or delivery fees

9. Mixed Invoice

Mixed invoices have both credit and debit charges on the same invoice. The total invoice amount can be positive or negative depending on the matters at hand. Small businesses rarely create a mixed invoice. However, it may be necessary if you need to reduce the amount a client owes in one of the projects you’re billing and then add it to another on the same invoice. Mixed invoices are issued when:

• Errors favor the client and buyer
• Combining a credit and debit invoice
• You want to deduct the amount a client owes in one invoice yet raise it in another

10. Timesheet Invoice

A timesheet invoice comprises a timesheet and an invoice. The invoice is used by anyone offering services, and the total cost is calculated based on the hours it takes to complete a project. It’s mainly used by businesses that provide customer services and are billed hourly. The invoice is issued throughout the project, recording the start and end of tasks, projects, hourly charges, and the total amount due. Use a timesheet invoice when offering professional services and charging by the hour.

11. Retainer Invoice

A retainer invoice is issued to clients requesting they pay for future service. The client pays in advance for work yet to be done or to secure a service that will be needed in the future. 

The payment on a retainer invoice can be considered a deposit to reserve services or prevent service cancellation. A retainer invoice is often used to secure professional services from a consultant, lawyer, or advisor. The invoice is issued alongside a legally binding retainer agreement and is used when:

• Offering professional services.
• A retainer agreement is in place.

12. Recurring Invoice

Recurring invoices are used by businesses that charge customers the same amount for their services. They’re common among IT businesses that offer the same service to clients monthly, charging the same amount. Also, a freelance digital marketer offering their services to a client every month can have a standard charge explaining the issuance of recurring invoices. Use the invoice when:

• Delivering goods or services regularly
• A business subscribes to a service, and the same bill is paid every time
• Payment to a business is paid in installments

13. E-Invoice

E-invoice refers to any invoice sent electronically, regardless of the type of invoice. E-invoicing is gradually becoming a standard practice in startups and freelance businesses. WHY? They’re faster and easier to create than typical invoices you have to print. Plus, issuing E-invoices also gets you paid faster. Use the invoice when:

• A customer prefers an electronic invoice.
• Sharing an invoice among stakeholders.
• A business uses an automated invoicing system.

Tips for Effective Invoice Management

With efficient management, invoice management can be more convenient and convenient, not to mention errors. However, by following these tips, you can manage your invoices effectively: 

1. Install an invoicing software to minimize human errors, save time, and enjoy these benefits:

• Accuracy 
• Time efficiency
• Easy tracking of payments
• Scalability
• Automated reporting

2. Issue invoices promptly to give the client enough time to pay, minimize disputes, and improve business cash flow. Consider these practices to ensure timely issuance of invoices:

• Keep accurate and up-to-date records
• Use automation software to generate and send invoices
• Provide different payment methods to your customers to ensure flexibility, especially for customers across borders: online payments, credit or debit cards, and bank transfers.
• Send a reminder to the customer before and after delivering the invoice.
• Don’t set a payment period beyond a month from the issue date.
• Keep a digital backup of all invoices using these services.
  • Onedrive
  • Dropbox 
  • Google cloud storage
  • Apple iCloud
• Ensure your invoice is tidy by using the appropriate template layout.

Frequently Asked Questions

What is the total invoice amount?

The invoice amount is the sum of all the client’s products or services. It’s arrived at by summing up all item amounts, taxes, and additional charges and deducting applicable discounts. 

What is a compulsory detail in an invoice? 

The compulsory details on an invoice include the word invoice at the top, company name, address, and contact information. Another compulsory detail is the current date, client’s business name, and address. It should also briefly describe what you supplied and the date it happened. 

What does an invoice composition look like?

The standard composition of an invoice is a header (INVOICE) business name, contact details, and a list of products or services rendered, their prices, and the total amount due. Other details include the date of issue, a unique invoice number, and payment terms. 

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In Summary

Invoices are vital payment facilitators for individuals and companies. A seller sends an invoice as a request for timely, efficient payment. A business can use different invoices for varying purposes, but they must be detailed to avoid payment delays.

Unfortunately, many business owners issue unclear invoices or provide inaccurate information, which can cause confusion and payment delays. Regardless of how many invoices you send, ensure they’re detailed, accurate, and timely to set exemplary standards with your customers.

The right approach for invoicing is making presentable invoices by including the company logo, seller and buyer details, total amount, and a short thank-you message. An attractive business logo is a way of marketing your business, and if you do it right, customers will remember your company. 

Remember to be consistent, ensure your invoices are error-free, and send them on time. If you’re sending many invoices and feel overwhelmed, consider installing invoicing software to automate the process.