Invoices speak volumes about your business to your customers, so invoices need to be professional, well-designed and accurate. Here's advice from leading accounting software company Xero on how you can create invoices that customers will notice – and pay on time.
Make an impression
Each and every invoice you generate sends a message about your business. When customers receive your invoices, they’ll form ideas about your organisation.
A poorly-designed, inaccurate invoice says that your business is disorganised and badly run. But accurate, well-designed, professional invoices say a lot about the quality of your operation.
Invoicing isn't just about requesting payment. It's an extension of your company's branding and marketing efforts.
That’s why it pays to make sure your invoices look professional. And it's even more important that they're accurate.
1. Get the numbers right
Of course, when you strip back the detail from an invoice, what's left is a demand for payment. Whether it's a piece of paper or an electronic document, it’s how you ask your customers for money.
So the first thing to think about is the amount of money you're requesting. It has to be right every time. If you repeatedly send out inaccurate invoices you probably won't be in business for too long. And whether you undercharge or overcharge consistently, customers will be less than impressed:
- If you charge too much they'll assume you're acting dishonestly.
- If you charge too little they'll suspect you're incompetent or cutting corners.
Neither one is good! So it’s important to get the numbers right. There are three steps to this:
- Track your hours or product sales accurately: Time-tracking software and POS tools will help (read our guide to retail POS). Ideally they should all connect to your accounting software - that way you won't have to enter the same information twice.
- Create an invoice that has accurate figures: With good accounting software, this will be easy. You'll be able to quickly generate an invoice using sales data you've already collected.
- Invoice in good time. Don't wait months between invoices... people's memories fade. Let too much time pass and your customer may have forgotten some of the work you did. If they think you're charging too much, it’ll have a negative effect on business.
These three elements are vital to the invoicing process. Get them right and you'll have the basics established. But that's just the start.
2. Invoice regularly and often
Get into the habit of invoicing. It's a fundamental part of your business, and you should treat it as such.
Your cashflow depends on an efficient invoicing process. Wait until the end of every month before invoicing and you're wasting time. You’re also losing money.
Get into the habit of invoicing the moment you finish a piece of work or make a sale. Good accounting software will make this easy. You can automate most of the process, saving you time and money. This will also help your customers. They may have budgeted to pay you within a specific timeframe. Invoicing promptly will help them keep their accounts in order.
3. Choose a delivery method
Some companies still like to receive paper invoices. But this is changing fast.
There's no point in shuffling paper around and stamping them with dates of receipt and payment. The modern alternative is easier. Electronic documents can be:
- moved around faster
- processed more easily
- archived without taking up any space
- indexed and searched quickly
Ask customers how they’d like to receive invoices. But make it clear you'd prefer to send them electronically. You’ll save time, and can be do it from your accounting software. It will also save you money on paper, printer consumables, envelopes and postage. Electronic invoices arrive faster, and you can even get a notification when your customers open an invoice.
4. Create beautiful invoices
You wouldn't necessarily think of the word ‘beautiful’ with something as basic as an invoice! But there's no reason why invoices should be dull tables of numbers.
If you're not a graphic designer, no problem. You won't need those kinds of skills. Good accounting software will have invoicing templates built in.
You’ll get a choice of beautiful designs which make sure your invoices make the right impression when they are received. All you'll have to do is add your brand. Which brings us to the next point.
5. Personalise your invoices
Accounting software invoice templates look great. But they'll look even better once you add your logo and branding.
You shouldn't need the help of a graphic designer to create a branded invoice. You probably already have a logo, and this will be stored somewhere as an image file. Import that image into your accounting software and that’s it – you're done!
Whether you're a retailer, manufacturer or service provider, a personalised, beautiful, professional invoice will help your business stand out.
6. Avoid unpleasant surprises
Your invoices should never be a source of surprise for your customers. Some businesses forget about this.
Sometimes a difference between a quoted price and an invoice total is unavoidable. You may have agreed a fee for providing a service or product, and due to circumstances beyond your control, the price has to be increased later, to cover your costs.
When it's time to create an invoice, don't just change the price without communicating with your customer first. Whether you supplied an estimate or a quotation, your customer deserves an explanation.
A professional invoice should contain only the agreed figures, even if they need to be adjusted after an initial quote. Unexpected surprises will only anger your customers.
7. Include all your business information
An invoice is a formal document and should contain all of the necessary legal information. It's wise to include:
- contact person
- company name
- registered business address
- company registration number
- contact phone number
- contact email address
- invoice date
- invoice number
8. Use a sensible invoice number
Invoice numbers can be whatever you want them to be, as long as they’re unique. But it makes sense to use a logical system.
For example, you might assign a customer number and an individual invoice number, then add the date. Let's say the customer number is 1340 and the invoice number is 0003. If the invoice was created on 12 June 2015, the number could be 1340-0003-150612.
This will help you to quickly and easily identify invoices just from their numbers. It makes sense to give the invoice document the same filename as well. Again, this will help you quickly identify the file when needed.
Accounting software should allow you to configure your invoice numbering system. It will also provide suggestions that might suit your particular type of business.
A logical invoice numbering system will also help you if you're audited. It will show that you take invoicing seriously.
9. Include your customer's details
Make sure the customer has all they need to process your invoice. Don't assume it will land on the right desk – or in the right inbox. It’s a good idea to include:
- name and job title of recipient
- company name
- company address
- their reference number, if applicable
- their purchase order or sales order number
10. Itemise the work done
This is important - you need to clearly state what work was done and how it is being charged. Luckily, good accounting software can handle this for you, and will provide line items for each entry. For example:
- services performed
- dates during which services were performed
- hours worked
- quantity of items supplied
- rate per hour or item
- amount
- sub-total
- tax amount
- total
These are just examples – your own invoices may need to include different items. Talk to your accountant if you’ve got any doubts about what to include.
11. Add payment terms and a sensible due date
Your invoice payment terms tell customers when (and how) you expect to be paid. This is an important part of every professional invoice.
12. Be polite
Don’t forget, an invoice is a communication between you and your customer. Since you want to retain your customers, you should treat them with respect.
So be polite on your invoices. Include a note at the bottom… something like: "Thank you for your custom. It’s very valuable to us".
Xero is beautiful accounting software that makes invoicing easy, and helps you get paid on time with automated reminders and online payment. You can try it free for 30 days here. And you can explore more small business guides here.
