Number your invoices in a single sequence where every number is unique and each one follows the last: INV-0001, INV-0002, INV-0003. You can add a prefix, the year or a client code to make the numbers easier to read, but those two rules (unique, and in order) are what matter.
This guide explains why, compares five common formats, and covers the awkward cases: starting out, cancelled invoices, a new year and more than one business.
The two rules
Every number is unique. No two invoices you issue should ever share a number. The number is how you, your client and your accountant refer to the invoice, and how a payment is matched to it. A duplicate makes both invoices ambiguous.
Numbers follow a sequence. Each new invoice takes the next number. A sequence shows at a glance that no invoice is missing, which is what an auditor or tax inspector looks for. In the UK and the EU, VAT invoices must carry a sequential number; in the US there is no federal rule, but a sequence is still the standard.
Everything else (prefixes, dates, the number of digits) is a matter of convenience.
Five formats that work
| Format | Example | Good for |
|---|---|---|
| Plain sequence | 0001, 0002 | Anyone starting out |
| Prefix and sequence | INV-0042 | Making invoices easy to spot in email and files |
| Year and sequence | 2026-0042 | Seeing at a glance which year an invoice belongs to |
| Prefix, year, sequence | INV-2026-0042 | Businesses with many invoices a year |
| Client code and sequence | ACME-007 | A few large clients, each billed often |
Some practical advice on each part:
- Prefix. Two to four letters is plenty. INV is common; your initials or a short business code also work. Trades often use their own: RO for a repair order, for example.
- Separator. A hyphen is the easiest to read and to type. Avoid slashes if invoices become file names, since some systems treat them as folders.
- Digits. Pad the number with zeros (0042, not 42) so invoices sort correctly in files and spreadsheets. Four digits allows 9,999 invoices; choose more if you need them.
- Date. A year makes old invoices easy to find. Year and month (2026-10) is useful only if you invoice a great deal.
The invoice number generator builds any of these formats and opens the generator with your first number filled in.
Client-based numbering
With a client code (ACME-007), each client has its own sequence. It reads well for a client who receives many invoices, but it has a cost: your invoices as a whole no longer form one sequence, so it is harder to see if one is missing. If you use client codes, keep a single running number as well (ACME-2026-0042) or keep a log of every invoice in one place.
Starting your sequence
You don’t have to start at 1. Many businesses start at 1001 or 0100 so a new client doesn’t receive invoice number 1. That is fine, as long as you continue the sequence from there.
If you already have invoices, start at the number after your last one. If you are moving from another tool, carry the sequence over rather than restarting.
Mistakes and cancellations
Never reuse or delete a number. If an invoice was wrong:
- Before it is sent: correct it and keep the same number.
- After it is sent but not paid: cancel (void) it, keep a copy marked as void, and issue a new invoice with the next number. Mention the old number in the new invoice’s notes.
- After it is paid: issue a credit note for the amount being reversed, then a new invoice if needed. Credit notes usually have their own sequence (CN-0001).
A void invoice in your records is normal; a gap with no explanation is what raises questions.
A new year
You can carry one sequence on forever (INV-0042, INV-0043…), or include the year and restart the number each January (INV-2026-0001). Both are acceptable, because the year keeps every number unique. Pick one and stay with it; what matters is that every number stays unique.
More than one business or brand
Each business should have its own sequence, and ideally its own prefix, so there is no doubt which entity issued an invoice. If one business trades under two names, one sequence with a different prefix per brand works.
How Folio numbers invoices
Folio suggests the next number automatically. It looks at the invoices saved in your browser, takes the highest, and adds one, keeping your prefix, year and zero padding (INV-2026-0042 becomes INV-2026-0043). You can type any number you like over the suggestion; the next invoice continues from the highest.