How to Write an Invoice for Small Business Owners

Easy-to-understand invoices help small business owners collect payments from clients. Here’s how to create an invoice.

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As a small business owner, invoicing your clients on time is essential. 

Creating an invoice may feel foreign if you’ve never done it before. But really, an invoice is just a way to record the hard work you've completed and ask for payment.

We’ll guide you through how to write an invoice and explore different ways to invoice clients, including using templates and software. 

Follow these steps and you'll be ready to start creating professional invoices in no time.

What is an invoice and when do you send one?

An invoice is a document that lists the services or goods you've provided to a client along with the amount you're owed. 

An invoice should clearly state what a customer purchased, the date they purchased it and how much they owe.

You should typically send out a sales invoice as soon as goods are delivered or after a service is provided. But you may also choose to invoice your customers on a schedule, such as once a week or once a month.

What to include in an invoice

Each professional invoice includes certain information. Here's a breakdown of the essential elements of an invoice:

  • Your business address, phone number and email address
  • Your client's name, address, phone number and email address
  • Invoice number
  • Invoice issue date and due date
  • Description of the goods or services provided
  • Quantity of goods or services provided
  • The rate or price per item or hour
  • A subtotal 
  • Any discounts
  • Any sales tax
  • Total amount due
  • Payment terms
  • Payment methods accepted
  • Late payment fees, if applicable

Should you use invoice software or invoice templates?

Next, you’ll need to decide how you’ll create your invoice. You can use invoicing software or an invoice template. 

Invoicing software lets you quickly and easily create invoices and share them with clients. 

In most cases, the software will automatically populate an invoice with your business details, including your company’s name and mailing address. 

Some popular invoicing software includes Zoho, QuickBooks, Xero and FreshBooks

It makes sense to use invoicing software if you have a high sales volume or need advanced features, such as payment tracking and automation. 

Alternatively, you can use a free invoice template to create your statement. 

There are lots of invoice templates to choose from online, such as Wave Accounting, which is free for life and includes many other features. You can also find invoice templates in Microsoft Word and Google Docs that you can customize and save. 

Using a free invoice template may be a better fit if you have a simple billing process or only need to create a few invoices.

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How to write an invoice in 6 steps

Whether you use online invoicing software to generate statements or opt for an invoice template instead, the basic steps remain the same.

Step 1: Customize your invoice and add your details

The header of your invoice should include your contact details, including your business name, address, phone number and email address. 

You should also include your logo if you have one and incorporate your company’s colors. This will help make your invoice look more professional.

Step 2: Include the client’s information

Below the invoice header, include the client’s name, address, phone number and email address. 

Make sure this information is accurate and up-to-date. Sending out an invoice with incorrect or missing information can cause confusion and delay payment. 

If you are billing a company, include the name of the company and the name of the person who authorized the work.

Step 3: Add an invoice number and date

Each statement should include three different numbers: the invoice number, the issue date and the due date. 

The invoice number is a unique code assigned to each document. The number makes it easier to track your invoices and ensures that each one is paid correctly. 

You should also include the invoice date (the date you created the invoice) and when the payment is due.

Step 4: List the details of the work performed

This is the most important section of your invoice. List the details of the work you performed, including: 

  • Date of the job
  • Hours worked or number of units
  • The agreed upon rate 

Be specific and include as much detail as possible when you write an invoice. If you are billing for multiple items, create a separate line item for each one.

If you’re required to collect taxes on your work, include them on the invoice. You should also detail any discounts or fees that apply to the work you performed. Make sure the total amount due is accurate.

Finally, you might want to include a footnote clarifying any information at the bottom. For example, describing conditions under which customers can return or exchange items can help avoid disputes and late payments.

Step 5: Provide payment details and instructions

When you write an invoice, make it clear to your client how they can pay you. Include your preferred payment method — such as a check or PayPal

You should also include payment terms, which describe when you expect to get paid.

Net 30 is a common payment term on invoices. This means the client has 30 days from the invoice date to pay you.

Due on receipt is another common option, and it means the client must pay you as soon as they receive the invoice.

You might even consider offering clients a discount for early payment. A little incentive could help you get paid faster.

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Step 6: Send your invoice

Try to send out the invoice as soon as the work is complete or the goods have been delivered. After all, the sooner you send it, the sooner you can collect payment. 

If you’re using invoicing software, you can usually email the document to the client directly from the software. If you’re using an invoice template, you can either email the invoice as a PDF attachment or print it out and mail the invoice to the customer. 

If you send your invoice via email, make sure to include the word “invoice” in the subject line. 

If the client doesn’t pay you within the specified time, don't be afraid to follow up with a friendly email or phone call.

Pro tip: Still waiting on a payment? Here are some tips for getting invoices paid on time.

Stay organized and keep track of invoices

Once you’re comfortable with the invoicing process, it’s important to keep your documents organized and accessible. 

Using accounting software is one of the easiest ways to keep your invoices organized in one place. Many software programs also help you track payments and create financial reports.

If you’re using an invoicing template, create a spreadsheet to track your invoices.

You can create columns for the invoice number, client name, due date and payment status so you can easily track which invoices are outstanding and which have been paid.

Using a document management system, such as Dropbox, can also help you streamline the invoicing process by storing, managing and retrieving statements.

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Frequently Asked Questions (FAQs)

Business-to-consumer sales require either a receipt or an invoice. Small businesses need to invoice to keep track of their sales and ensure timely payment from customers. Invoicing also helps communicate payment terms to clients, which can help avoid disputes. Finally, invoices are important for recordkeeping and tax purposes.

You can include your company’s employer identification number (EIN) on an invoice, but it isn’t required.

An invoice and a bill are basically the same thing, but the two words are used by different people to describe the same transaction. A business owner usually calls this document an invoice while a customer usually calls it a bill. They are both statements about the goods or services provided and the amount due. 

A note: Invoices may include more details than a bill. For example, payment terms like net-30 are usually displayed on an invoice but may not be included on a bill.

Rachel Christian is a Certified Educator in Personal Finance and a senior writer at The Penny Hoarder. She focuses on small businesses, retirement, investing and taxes.

Rachel Christian
Written by
Rachel Christian
Rachel Christian is a senior staff writer at The Penny Hoarder. She's worked as a professional journalist since 2014, and her work has been featured in Business Insider, the Osceola News-Gazette, Evansville Business Magazine, the Mount Vernon Democrat, Evansville Courier & Press, the Winter Haven Sun and more. She has written extensively about retirement, investing, life insurance and other aspects of personal finance. In June 2021, she became a Certified Educator in Personal Finance with FinCert, a division of the Institute for Financial Literacy. Rachel holds a bachelor’s degree in journalism from the University of Southern Indiana.
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