We already started to learn what is an invoice: an invoice is a fancy name for a bill, as it is often in the form of a list of purchased items or completed services, along with the total amount owed, and it is given to the purchaser from the provider. An invoice is created and given or sent to someone who owes a company money.
The cool part about an invoice is that it can come in several different forms. An invoice can be as simple as a handwritten list on a piece of scrap paper, or as sophisticated as a typed list created from an official invoicing program.
Another perk of an invoice? From the customer’s perspective, an invoice helps them keep track of where their money is being spent, and assists with future financial planning. Some businesses use invoices as a way to keep track of inventory or hours worked, so you can see why this form of documentation has become so important in running a company.
In its most basic form, an invoice would list the products sold or the services completed, and the total amount owed. However, most professional invoices include a plethora of information, mostly for bookkeeping purposes.
Information included in an invoice
A professional invoice almost always includes the following information: an invoice number, an itemized list of the products sold or the services completed, a dollar amount for each line item, information about taxes and fees, the date each line item was completed, the date the invoice was sent and the date the payment is due, along with any contact information for all parties involving the billing, and information on how the payment is expected to be completed.
There are also different types of invoices, including interim invoices from work in progress, final invoices, proposed invoices, miscellaneous invoices, interest invoices, and recurring invoices. All of these generally include the same information as a basic invoice, but are provided to the affected party at different times during the business transaction.
An invoice can be created by hand, or typed on a computer, although there are several different programs designed specifically to create invoices, making the job very easy, especially if you have to create several businesses as part of your business. While creating invoices is important in order to get paid for all of the services you’ve provided or for the products you’ve sold, an invoice is also an important part of bookkeeping.
Differences with a quote or a receipt
It is important to note that an invoice is not that same things as a quote, or a receipt. A quote is provided before any work is completed or products sold, while a receipt is given after the payment is completed. So, an invoice comes in the middle of those two documents. For more information on the different uses for all of these documents, please visit our page (hyperlink text) that explains all you need to know.
Why do you need to create and send invoices?
While creating an invoice, or maintaining an entire system of invoices may seem very difficult, know that this is expected in the world of business. Often, you will not get paid until you send an invoice. Once you send out your invoices, you will have to keep track of who has paid them, and who has not. You may find yourself having to remind people to pay their invoices owed, which is why having a system will ensure you get the money that you have asked for.
If you do get paid before sending an invoice, it is still expected that you send the invoice since many companies use them for bookkeeping and for financial planning.
To see a sample of an invoice, and learn how to craft a successful and professional invoice, head over to our invoice example.
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