An invoice is a request for payment for work you have done or goods you have supplied. To make one, you need seven things: your details, your client’s details, a unique invoice number, the date and payment terms, a description of the work with prices, the total, and instructions for paying you. Put them on one page, save it as a PDF and send it.
The rest of this guide goes through each step, shows a finished invoice, and covers the mistakes that most often delay payment.
Before you start
Have these to hand. Most of them you will only type once.
- Your business details: the name you trade under, an email address, and usually a phone number and postal address. A logo is optional.
- Your client’s details: the name of the person or company that will pay, and their billing address. For a company, ask who handles invoices; it is often not the person you worked with.
- What you agreed: the price, the payment terms and any purchase order (PO) number. If the client gave you a PO number, they will probably need it on the invoice before they can pay.
- Tax information: whether you need to charge sales tax, VAT or GST, and at what rate. If you are not sure, ask an accountant or your tax authority; an invoice can’t fix a tax mistake after it is paid.
Step by step
- Add your details. Put your business name at the top, with your contact details and, if you have one, your tax or VAT registration number. This is your letterhead; it tells the client who is asking to be paid.
- Add the client’s details. Write the name of the person or business responsible for paying and their billing address. Add a contact name or department if invoices go to a shared inbox.
- Give it a unique invoice number. Every invoice needs a number that has never been used before, in a sequence: INV-0001, INV-0002 and so on. See how to number invoices for formats that work.
- Set the dates and terms. Add the issue date and the payment terms, such as Net 30 (due 30 days after the invoice date), and write the due date itself. A specific date gets paid faster than a rule the client has to work out.
- Describe the work. List each service or product on its own line, with a quantity, a unit price and the line total. Describe it in words the client will recognize: “Kitchen cabinet installation, 24 hours”, not “Labor”.
- Calculate the total. Add the lines to get the subtotal. Subtract any discount, add tax on the discounted amount, then add any separate charge such as shipping. If the client has already paid a deposit, subtract it and show the balance due.
- Say how to pay. Give bank details, a payment link, or who to make a check out to, and ask the client to quote the invoice number. Then save the invoice as a PDF and send it.
A finished invoice
This is what the seven steps produce. The business is at the top left and the invoice number opposite. Billed to, the dates and the amount due are on one line, the work is itemized, and the totals and payment details are at the foot.
Marlow Studio
410 Market Street, Suite 200 San Francisco, CA 94105
accounts@marlowstudio.com
(415) 555-0132
marlowstudio.com
Invoice
INV-0042
| Description | Qty | Unit price | Amount |
|---|---|---|---|
| Brand identity — wordmark, colour and type system | 1 | $2,400.00 | $2,400.00 |
| Website design and build, six pages | 6 | $450.00 | $2,700.00 |
| Hosting and maintenance (October – December) | 3 | $79.99 | $239.97 |
- Subtotal
- $5,339.97
- Discount (10%)
- −$534.00
- Sales tax (8.25%)
- $396.49
- Total USD
- $5,202.46
Payment
Bank transfer to Marlow Studio LLC First Coastal Bank · Account 000123456 · Routing 121000358
Notes
Thank you for your business. Please include the invoice number with your payment.
A studio’s invoice to a bakery: three items, a 10% discount and sales tax. Classic template
How to work out the totals
The order matters, because tax is normally charged on the price after any discount:
| Line | How it is calculated |
|---|---|
| Line total | Quantity × unit price |
| Subtotal | The sum of all line totals |
| Discount | A percentage of the subtotal, or a fixed amount |
| Tax | Tax rate × (subtotal − discount) |
| Shipping or other charge | Added after tax |
| Total | Subtotal − discount + tax + shipping |
| Balance due | Total − any deposit already paid |
For example: two lines of $1,200 and $300 give a subtotal of $1,500. A 10% discount takes off $150, leaving $1,350. Sales tax at 8% on $1,350 is $108, so the total is $1,458. The invoice tax calculator does the same sums.
Common mistakes that delay payment
- No due date. “Payable on receipt” or “Net 30” is fine, but the date itself removes any doubt about when the invoice is late.
- Sent to the wrong person. Your contact may not pay invoices. Ask who does, and send it to them as well.
- Missing the PO number. Many companies cannot pay an invoice that doesn’t quote their purchase order.
- Vague descriptions. “Services, $4,000” invites questions; questions delay payment.
- No payment details. If the client has to ask how to pay you, you have added a round trip.
- A reused number. Two invoices with the same number confuse your records and theirs.
Making your next invoice faster
Once you have made one invoice, the next should take a minute. Keep your business details saved, start each new invoice from your last one, and let the numbers run on in sequence. Folio does this automatically: it remembers your details, suggests the next number and can duplicate a previous invoice with today’s date.
If your work follows a pattern, starting from a template made for your trade saves more time again. A contractor’s template already separates labor and materials; a photographer’s already has sections for the session, prints and travel.