How to Make an Invoice: Step-by-Step Guide

Understanding how to create a complete invoice is a crucial part of the business.

Without invoices, you wouldn't be able to accept payments for the goods and services you provide.

An interesting survey shows that 54% of SMEs anticipate delayed invoices. But it's not uncommon for businesses to experience delayed or rejected payments due to an error on an invoice or flaws in their invoicing process.

That's why we created this guide.

Keep reading to understand how to make a professional invoice, so you avoid making simple mistakes and get paid on time.

What to Include on an Invoice?

Before you learn how to make an invoice, it's important to know what an invoice is.

An invoice is a financial instrument that details the goods or services provided in a business transaction. Here is some information you should include on an invoice: 

• Business information: Include your business name, address, phone number, email, and website at the top of the invoice.
• Client information: Include the client's name, address, and phone number, and the contact person's name if invoicing a business.
• Invoice number: Use a unique identification number to track and manage the invoice.
• Invoice date: Clearly mark the date the invoice is issued and sent to the client.
• Description of goods or services: Provide a clear and concise description of the goods or services, including quantity, unit price, and total amount.
• Payment terms: Clearly state the payment terms, including the due date and any late payment fees or interest charges.
• Total amount due: Clearly mark the total amount owed for the goods or services provided.

You should keep in mind that every business has a different structure. For this reason, it’s important to know how to fill out an invoice accordingly.

💡Tip: A well-structured invoice represents all the required information in a clear and concise manner.

How to Fill Out an Invoice: A Step-by-Step Guide

Prior to the tech boom, invoices were manually written out by hand. Now, there are various ways to make invoices.

Many businesses use free invoice templates like Microsoft Word or Google Sheets, to create invoices from scratch or they may opt to create an invoice template of their own via online tools such as invoice automation software.

But to create an invoice, you’ll need to have a proper structure. 

This would mean simplifying the invoice with essential details and breaking it down into different sections.

With that in mind, let's take a look at how to write an invoice in a step-by-step guide below.

1. Add your company logo with business and customer details

On the top section of an invoice, add details including, your business logo, business name and address, and your customer details.

These details are information that is commonly included on the top, along with the term “Invoice.”

Next, you will need to use an invoice identification number. Here’s how you can add an invoice number.

1.1 Invoice identification number

If you want, you can also include a customer code as well, this will distinguish invoices more easily when using this technique.

Learn more about invoice number and how to use it correctly in our guide.

2. Business or personal details of transacting parties

This section will include all the details related to you, your business, and the company or individual you are invoicing.

To request payment from a company, you will need some information from them.

Some of the important details that should be included in this section include:

• Company names 
• Tax identifier number or business number 
• Company address details
• Business Contact information including email and phone number

Some of these details can vary from being voluntarily provided to mandatory depending on the country of invoice.

Specifically, the tax identification number or business/company number. If local laws mandate sales or service tax collection from businesses, then this must be provided.

For example: 

• All businesses in Australia have to apply for a registered Australian Business Number (ABN) that must be listed on an invoice. 
• Goods and Service Tax (GST) numbers are associated with every business in India.
• In the European Union, VAT identification numbers must be included if the local laws require it. 

3. Invoice details: a table with a list of services or goods provided

The table section of an invoice is where you are going to break down exactly what you are seeking payment for.

This could be for services provided or goods supplied. Generally, the table will be broken down into three or four columns.

Ensure that the information in this section is updated to reflect the work or goods that payment is being requested for.

Simple mistakes of amount mismatches and incorrect descriptions can reflect poorly on your business.      

4. Payment details 

This next section includes all the payment details that you need to provide to enable the customer to facilitate payment. 

There are two overarching payment method types, international payment and country-specific or internal payment. 

International payment

When you need to make a cross-border transfer, you can choose from various international payment methods.

Types and details that are commonly provided include: 

• For a telegraphic transfer (TT), the SWIFT/BIC code is necessary for cross-border payments.
• For SEPA payments being made within Europe, the IBAN account number is required.
• For PayPal transfers, a valid email address is required to make payment through the Paypal network

Some countries are bound by strict local tax regulations for making and receiving international payments for commercial services or goods provided. This may impact which international payment method you choose to get paid. 

Be aware that different international payment methods can incur different fees for a transfer to be facilitated or accepted. 

Country-specific or internal payment

When you invoice companies/individuals from your home country, you can provide local bank account details or payment methods unique to that country.

For instance, in Hong Kong, you can include your HK bank account number together with your name.

If you are invoicing in Australia, then the company account holder's name, BSB number, and account number details need to be provided for a local transfer. 

There are many accepted payment methods available now, with unique corresponding details attached to each.

Preferences can depend on either transacting party and are usually stipulated within the payment terms of the invoice. 

Payment terms

Finally, when it comes to payment, be sure to clearly outline what you expect so there aren't any misunderstandings. Some details to consider here are foreign currency exchanges, a due date for payment, and penalties for late payments. 

Foreign currency exchange terms

If you require to be paid in a specific currency, then this must be specified in the payment terms.

Currency exchange rates are volatile and constantly changing, so if your payment requires a currency conversion, the amount can differ depending on the actual confirmed transaction date. 

The due date for payment

Although it is not mandatory to provide a due date for payment, it can help alleviate the chance of delayed payment.

Some common time frames that you will commonly see for payment requests are within or by 14, 30, 60, or even 90-day allowance.  

Penalties for late payments

If your company has specific payment deadlines or schedules to meet, that can be considered as penalties for late payments.

It can be in the form of an administration fee for follow-ups for late payments, or interest incurred after a certain timeframe for any delayed payment. 

Tips on How to Send an Invoice

Knowing when and how to send an invoice can be crucial for your business. 

Invoices are usually sent after you complete your project. It can be on a weekly or monthly basis, depending on the company or work policy.

Here are some best practices for making an invoice:

• Choose the right format: Use email, paper mail, or online invoicing software based on what works best for your business and clients.
• Be clear and professional: Create a professional-looking and concise invoice with all necessary details, such as the date, invoice number, client information, and payment terms.
• Follow up on late payments: Send a friendly reminder email or make a phone call to ensure that clients are aware of payment terms if they haven't paid on time.
• Offer payment options: Offer multiple payment options such as credit card payments or PayPal to make it easier for clients to pay invoices on time.
• Automate invoicing: Streamline your invoicing process and ensure timely delivery by using invoicing software.

With these best practices, you can ensure that your invoices are sent on time and professionally.

💡Tip: After receiving payment for an invoice, you may need to generate a receipt. Check out our article on what is a receipt and invoice vs receipt to learn more.

Streamline Your Invoicing Process with Our Free Invoice Generator

Creating and sending an invoice can be a complex process. With several factors to consider such as invoicing format, tax calculation, payment details, or terms of payment.

By following the guidelines, and best practices, and using the right tools available, you can make the process more efficient. 

To streamline this process, we offer a simpler solution to optimize your billing process with our free invoice generator tool.

With just a few clicks, you can create custom invoices that meet your specific needs, and download them in PDF format. It's fast, simple, and best of all, it's free - no sign-ups required.