As a new business owner, you’ll likely need to write an invoice to a customer. Read this tutorial to learn how to write an invoice from start to finish.
You've become your own boss; now it’s time to dig into the operations of your business. For instance, do you know how to write an invoice? You’ll need to know how to get paid on time.
An effective invoice is also proof of your audits and internal controls, factors that keep track of your monetary resources, losses, and profits. Because invoices are an essential part of your business, you need invoicing software to help create them.
With this scenario in mind, here is a step-by-step guide on the process of creating invoices for your business.
The internet is full of invoice templates to use as a guide for getting your invoice ready. You can also use an invoice generator to create your invoice template, but the generator might not give you the most professional template for your business needs.
Your invoice represents your business brand. As such, include your business logo in the invoice header and use your business colors to format the style of the invoice. Use distinctive fonts to ensure everything is visible, especially the word "Invoice."
In addition to your logo, you can include your headshot since it humanizes the invoice. This makes it easier for customers to build trust with your business.
Nonetheless, as you support your branding and marketing strategies with your invoice, remember to stay professional.
A professional invoice layout is easy to create using Microsoft Word, Microsoft Excel, or Google Docs tools. The overall layout of your invoice should follow the following format:
Determining the price estimate for a job is a skill learned with time. When learning how to write an invoice, you must learn how to negotiate the price with your customers. Usually, the customer asks for a quotation to indicate the price of your goods and services.
If the customer asks for a discount, ask questions that focus on the customers' needs. This allows you to identify areas to add value to the client. When you start to negotiate your prices, tie your costs to the client's value.
Also, ensure you know your needs as a business owner to ensure you do not offer discounts that dent your markup. If you concede on a customer's price, ensure it is a choice that works for you.
For instance, if this is a client with the potential to bring you significant repeat purchases, it may be worth decreasing your price. But if this is a one-time customer, you can consider trying your luck with the next lead.
When learning how to write an invoice, there are specific details you must include in the document, which are:
Every customer receiving your invoice should know how to get in touch with you or your business as soon as they look at the invoice for several reasons; it is a legal requirement that every invoice include the business contact details.
Also, regardless of your precision, some customers will likely raise issues with your charges. For instance, a customer might want you to explain a given cost if the amount is higher than the agreed value.
Or, in some cases, a customer might need to get in touch with you for repeat business, and adding your contact details in the invoice makes it easier for them to reach you. As such, ensure you include your name, business name, business registration number, email address, business address, and phone number in the invoice.
If your business has several members and employees, consider creating a specific email address and phone number for invoicing.
This makes it much easier for customers to communicate with your business on matters that involve bills and for you to track these communications.
Reduce customer questions by providing clarity in this section through your product or service descriptions. This means providing details for every product or service you offer a client separately. Also include the quantity of the goods sold next to their price.
For instance, if you are offering a painting service, a product used is “paint,” and the act of painting would be the service of labor. As such, indicate the paint's type, amount, quality, and price.
Also, indicate the number of hours you used to finish painting the entire project, your cost per hour, and the total labor cost. The About section ensures you experience no delays on payments resulting from confusion or misunderstandings.
Include the dates you sold your products or services to the customer and the date you issued the invoice to clarify the invoice offers. The date also acts as a reference point for due dates since you can identify when you completed the work or sold the goods.
Even though you've already agreed on the payment terms, ensure you include that information in the invoice. Identify the payment method you prefer to use when receiving payments. Also, indicate whether the payment is in the form of credit, cash, checks, or online payments.
If you use different payment options, list them. For each payment option you add to the invoice, ensure it has the appropriate details for payment to go through, like the email link for PayPal or banking details for your business bank account.
Remember to consider the transaction cost, security, convenience, and client preferences when choosing your payment option.
Also, indicate the payment due date or the expected timeframe. Make sure your terms are easy to understand.
When writing an invoice, remember to include discounts directly on it. Create a discount type item for occasional events or an offer that happens once only in amount or percentage, which should be a positive number.
Do this for every item you sell at a discount, especially if different items have different discount rates. Also, indicate the value of the discount in amount and a negative value.
For instance, if you sold ten gallons of paint at $2,000 but applied a 15% discount, the discount value, in this case, is $300. On the invoice, it is represented as -$300.
This makes it clear to the customer that they have a discount of $300. It also makes it easier to determine the cost of the products or services before the sales tax is applied.
You must consider whether what you are selling is taxable, whether you’re offering a discount or not.
As mentioned, the sales tax is applied after the discount is applied but only to taxable items. As such, determine the sales tax rate in your region and add the value of the total items taxable on your invoice.
In our example above, the total amount of taxable goods is $2,000. Since the discount offered is $300, the total taxable amount is $2,000 - $300 = $1700. If the sales tax is 2%, the amount of sales tax fee, in this case, will be 2% x $1700 = $34.
If the customer pays value-added tax (VAT) during purchase, include it in the invoice. You should be VAT registered and, thus, use VAT invoices if this is the case. Your VAT invoice should include all the information in a standard invoice as well as:
Ensure you list all the taxes clearly on the invoice, including the amount of tax, the new total the customer is to pay, and the tax rate.
It is possible to incur expenses during service and product sale and delivery. For instance, if you offer doorstep delivery, the shipping cost for delivering goods to your customer is considered an expense. It is charged to the customer and added to the total amount due before tax.
For instance, if the delivery fee is $10 from our example above, the total amount due is $1,700 + $10 = $ 1710.
First, indicate the total amount of money due for each item or service sold without considering the expenses and the discounts. This is the $2,000 total amount of goods sold in our example.
Before sending the invoice, ensure it has your signature and name to authenticate your identity.
Include a section for your company's name and signature as well. The signature is your company logo with your email address or other contact details in most cases.
You can add attachments to your invoice to give your clients more context, like adding proposals on payments, contracts, schedules, and project files. You can add attached documents or links to the invoice email.
Send your invoice and ensure no one can edit it to prevent fraudulent manipulation of your pricing values. Include the word invoice on your email subject letter to make it noticeable. Also, reach out to your customer to ensure they know you've sent the invoice.
In case of a delayed payment, reach out to your customer for feedback again. We also mentioned using an invoice generator when learning how to write an invoice. You can also use accounting software like QuickBooks or Freshbooks to get the job done more professionally.
And if you are looking for opportunities for self-employment, get in touch with Hoist and start your painting business hassle-free. Hoist has a team of experts with incredible value in creating, running, and managing a business.
Sources:
A Complete Guide On Invoice Templates | QuickBooks
How To Negotiate Product Prices With Customers | Indeed.com
9 Documents You Can Attach to a Quote or Invoice | Invoice Ninja
Are you a painter? Grow your business with Hoist. We’re the sales tool for winning more jobs in less time.
