Invoicing 101 – Are You Doing Them Right?

The Basics of Invoicing

Sometimes covering the basics can help you learn and improve processes in your business, no matter how long you’ve been working. 

One of the most important parts of a business and getting paid is invoicing. Ensuring your invoicing process is streamlined is key to getting paid quickly.

So, what is an invoice?

Let’s start at the beginning. An invoice is a payment request that lists goods or services you have provided to a customer. It details what they owe and how they should pay you.

An invoice is also an essential tax document that you will probably need to prove what you have earnt and if relevant, any tax you may have collected in the transaction. 

They are also useful for keeping a track of your sales and planning for your business’s future. 

What should you include on your invoice?

Your invoice should clearly state all of the information a customer will need to pay you. 

The exact details will vary depending on your industry, but all invoices should include; who the transaction is between, what service of goods were purchased, how much is owed, how they can pay it and when it should be paid by.

Your document should clearly state the word ‘Invoice’ on it at the top, the date it was issued and a unique invoice number.

When outlining the service or goods you provided, you should include; a brief declaration, the price per hour/item/fixed price that was agreed upon, the quantity and the total price.

What ways are there to invoice?

Time tracking

When you invoice based on actual time and costs, accurate time tracking is essential to ensure you don’t miss out on billable hours. 

There are numerous apps out there that can help you to keep track of your time, such as:

• TimeTracker by eBillity which especially helps with large teams
• Everhour, a time management tool offering detailed and customizable task insights
• Minutedock, one of the top rated apps for Xero!
• Harvest which provides simple time tracking, powerful reporting, and quick invoicing
• Timely, designed to help you deliver exceptional client experiences
• BeeBole, the fast and flexible time tracking for all types of companies

Quoted time & costs

This type of invoice provides a customer with a quote at the beginning of a job, which they will have agreed on before the work began, regardless of the hours it took.

It’s important to still track your time during these jobs so you know whether you’re quoting a price that accurately covers your time and costs.

Progress

Progress invoicing means you will bill your customer when you reach certain milestones within the project or at certain time intervals. This type of invoice allows you to get paid throughout the project which is good if it is likely to take a long time to complete.

Your invoice should include the total quoted value, any work that has been completed, the total currently due and the sum remaining for the rest of the project. 

Percentage

Percentage of value invoicing requires your customer to pay a certain percentage of the overall quoted job price. This is common when you require a deposit be paid before the work starts. 

Final

A final invoice is the last one you send to your customer after a series of progress invoices. It means the work has been completed and outlines any outstanding balance due. 

How do you make an invoice?

Manually

You can easily put together a template manually, which is great as it is free! This works well if you won’t be sending out many invoices, but can be time consuming if you are.

There are lots of great invoice templates available from Xero that you can customise with free programmes such as Google or Microsoft. 

Software

Using specific invoicing software will speed up your billing process and remove the potential for human error. It will also provide insights that can help you run and improve your business.

Depending on the type of software, you will be able to: import time tracking and cost data directly to your invoice, easily generate an invoice at any point, create custom templates, bill for multiple jobs at once, offer ‘pay now’ options and track the progress of invoicing for each client.

Some great invoicing apps worth checking out include:

• WorkflowMax, a job management software that enables service businesses to manage the full job lifecycle in one place
• Invoiced which helps businesses get paid faster and waste less time on collections
• Invoice2go, the world’s top-selling invoicing app
• Check an Invoice, the fast, touchless service and AI system

You might also want to consider invoice insurance, such as TradeLock. These services safe-guard your business against late or non-payments. 

Get More Business Blogs Like This

Like Us On Facebook  |  Follow Us On Twitter | Follow Us On LinkedIn