How to write an invoice

What an invoice is for

An invoice is a request for payment that says who is asking, who is being asked, for what, how much, by when, and how to pay. The test of a good one is simple: a person in the customer's accounts department who has never heard of you should be able to pay it without sending a single question back.

Everything below follows from that test. Each part exists to answer a question the payer would otherwise have to ask.

Your details

Start with who is asking. Your trading name, your address, an email address for questions, and a phone number if you take calls. If you are registered for a sales tax or VAT scheme, add the registration number here, because the customer may need it to reclaim the tax.

Your logo is welcome, but it is not one of the details. A customer pays the name and the bank account, not the picture.

Your customer's details

Then who is being asked. The customer's business name, the person or department the invoice is for, and their address. For a business customer, ask whether they need a purchase order number on the invoice; many accounts systems will not pay without one, and adding it later means a second invoice.

Keep a record of each customer's details so every invoice to them is consistent. A name spelled two ways across two invoices is the kind of thing that gets a payment held.

The invoice number

Every invoice needs a number that no other invoice has. The usual shape is a short prefix and a padded number, such as INV-1042. Issue them in one unbroken sequence and never reuse one, even for an invoice you cancelled. A gap or a repeat in the sequence is what an auditor, or a suspicious customer, asks about first.

If you make a mistake on an invoice you have already sent, void it and issue a corrected one with the next number. Keep both.

Issue date and due date

The issue date is the day the invoice was created and sent. The due date is the day payment is expected. Write both as calendar dates. "Net 30" on its own asks the customer to count; "Due 30 September" does not. If you use payment terms like due on receipt or Net 15, state the term and the date together.

Northline Studio, the fictional business in every example on this site, issues INV-1042 on 1 September with a due date of 30 September. Which term to choose is its own subject, covered in invoice payment terms explained.

The work: items, quantities and rates

The body of the invoice is a list of lines. Each line names what was done or supplied, how many, at what rate, and what that comes to. Be specific enough that the customer recognises the work without being so detailed that the invoice turns into a report: "Design hours, 2 at $150.00" says more than "Services".

Quantities and rates matter even for a fixed-price job, because they show how the figure was reached. A single line with a quantity of one and the agreed price is fine. Where you bill by the hour or the day, the unit is the quantity and the rate is the price per unit.

Tax

If tax applies, show it as its own line, with the rate and the amount, below the subtotal. Where different lines carry different tax treatment, the invoice should make that visible. If you are not registered for a tax scheme, do not add tax at all, and do not call anything on the invoice "tax" unless it is. What has to be shown, and whether you should be registered, depends on where you are and what you sell.

The total

The total is the one number the customer will pay, so it should be impossible to misread. Show the subtotal, any discount, the tax, and then the total in the currency you expect to be paid in. If a deposit has already been paid, show it as a line against the total and state the balance due. An invoice with two totals and no explanation is an invoice that gets queried.

Payment terms

The terms say when the money is due and what was agreed about deposits, part payment and lateness. One or two sentences near the total is enough. Repeat only what the customer already agreed to; an invoice is not the place to introduce a new condition.

Payment instructions

Say how to pay. If you take card payments, give a link. If you take bank transfers, give the account details the customer needs and a reference to quote, usually the invoice number. If you take both, say so. Missing payment instructions are the single most common reason an invoice that everyone agrees with still goes unpaid for weeks.

An example invoice

Here is INV-1042 laid out as the customer would read it. Northline Studio is fictional and the figures are illustrative.

Two things are worth noticing. The tax line is smaller than ten percent of the subtotal because the print proofs carry no tax, and the invoice shows that rather than hiding it. And the terms repeat the due date in words, so a reader who skipped the header still knows when to pay.

Before you send it

Read the invoice as the payer. Is every part above present? Is the customer's name spelled the way they spell it? Does the total match the estimate or the agreed price? Is there a purchase order number if they need one? Is the due date a real date? Can they pay from what is on the page?

Then send it as a PDF, and if you can, as a link to a page where the customer can pay. Keep a copy, and note when it went out; that date is what your reminder will refer to.

Check the rules where you are

This guide is general information for service businesses. It is not legal or tax advice. What an invoice must show, whether and how tax appears on it, how long you must keep copies, and what wording is required all differ by country, and sometimes by the kind of customer. Check the requirements in your jurisdiction, and ask an accountant if you are unsure.

Tools that help

The free invoice generator builds an invoice with every part above in your browser and prints it as a PDF, without an account. The invoice templates show seven layouts of the same information. When you are ready to send invoices, chase them and record payments in one place, online invoicing describes how MetroPay does it, payment reminders covers the follow-up, and pricing says what it costs today, which is nothing.