Chapter 2

How to make an invoice that's taken seriously

You’ve done the work; now it’s payment time. Let’s walk through the process of making an invoice.

Small business owner creating an invoice at their desk

The etiquette of raising an invoice

Before drawing up an invoice, make sure your customer is expecting one. If your invoice comes out of nowhere, they may be slow to pay it, or even annoyed. Explain when you’ll be invoicing before you start doing business with a customer. If you don’t have an agreement in place, at least tell them when an invoice is about to be raised.

What information goes on an invoice

You need to show the seller, the buyer, and what was exchanged. You may also be required to show if you collected tax on the sale.

Anatomy of an invoice

The layout and information that makes up an invoice

Some of the details, such as your business name, will stay the same from one invoice to the next. Lock those things into your invoice template so you don’t have to keep rewriting them every time.

How to create an invoice number

You need to have a unique invoice number on every bill you send. This is to help you, the customer, or potentially auditors to track down specific invoices.

An invoice number can be any string of numbers and letters. You can use different approaches to create an invoice number, such as:

  • numbering your invoices sequentially, for example INV00001, INV00002
  • starting with a unique customer code, for example XER00001
  • including the date at the start of your invoice number, for example 2021-01-001
  • combining the customer code and date, for example XER-2021-01-001

Your numbering system can help you organise and search for past invoices quickly.

Invoice details – how much do you need to put in?

Always provide a description of the goods or services supplied so the customer knows what they’re paying for. If you provided a quote, use the same language in your invoice so the customer can see you’re delivering on your promise.

You want your invoices to be concise, but provide enough detail that your customer doesn’t need to come back with questions. Limit your invoice to a single page if possible.

If you need to provide a detailed record of the work done or a breakdown of the items used on the job, you can provide a summary on the invoice and add the details in an attachment.

Use an invoice template

The secret to a great invoice is having a great template to start with. A template – or templates – that you use each time, eliminates lots of copying and pasting and fiddly formatting.

Handwritten invoices are practically a thing of the past, so your choices are to:

  • create a Microsoft Word or Google doc
  • use a spreadsheet with simple formulas that calculate totals and taxes
  • use a template that comes with your invoicing or accounting software
  • or you can use our free template

If you’re creating your invoices in a Word document or spreadsheet, save it as a PDF before sending. That simple step can give you some protection against fraudsters.

The unbreakable rule of making an invoice

By far the most important thing about invoicing is that you remember to do it. That may sound ridiculous, but people forget all the time.

Find a regular time that suits you to do your invoicing. That might be the end of the day or the end of the week. Put that time aside and just get on with it.

If it’s fast and simple to make an invoice, you won’t be so tempted to put it off. Consider using a mobile app so you can invoice on the go from your phone.

How can invoicing software help?

Software can speed up a lot of the processes around billing.

  • They have dozens of templates to choose from
  • You can drag and drop your logo to brand them
  • They allow you to create quotes
  • You can quickly convert a quote into an invoice
  • Invoices can be created and sent on a phone
  • You can offer a ‘pay now’ option for customers with credit or debit cards

Main steps to follow when preparing an invoice

Here are the main steps:

1. Open your invoice template.

2. Add the date.

3. Enter the invoice number.

4. Fill out the customer name, address, reference and/or order number.

5. Enter a description of the goods or services you provided.

6. Total the costs and double-check your maths.

7. Check and make any changes to the payment terms that apply to this customer or this job.

8. Get the invoice approved if you need to before you send it.

9. If you use a Word document or spreadsheet template, save the invoice as a PDF before sending to provide some protection against it being altered by fraudsters.

10. Once sent, file a copy for your tax records.

Get the client, do the work, and invoice as soon as possible. Make the invoice so clear you get paid for it, no questions asked. The invoice should be your brand equity. The client should be in no doubt about the value-add you bring.

Lisa Martin, Xero gold partner, Go Fi8ure

Disclaimer: Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.

Guide to invoicing

Do your invoices go unpaid for ages? There are proven ways to change that. Check out these tips on the art of invoicing.

Download the guide to invoicing

Learn how to create and send invoices that get opened, understood, and paid. Fill out the form to receive our invoicing guide as a PDF.

Start using Xero for free

Access all Xero features for 30 days, then decide which plan best suits your business.

  • Included
    Safe and secure
  • Included
    Cancel any time
  • Included
    24/7 online support