There are few words that can suck the joy from a room quicker than invoicing. Everyone has been on the losing end of an invoice. Perhaps you never received payment for a major project, or perhaps your invoice arrives for far more than anticipated or agreed upon. Perhaps “due upon receipt” means something very different to you than it does to them. Maybe you just don’t know where to get one: do you purchase a business invoice template from printit4less.com or do you download from Microsoft and go digital with fillable PDFs?
Invoicing can sound like a dry topic, a burdensome task, or a tense, fretful endeavor. Long nights, unanswered emails, and dwindling bank accounts often come with the territory. But it doesn’t have to be that way.
Bright-eyed freelancer or grizzled entrepreneur, you have an invoicing challenge. Or two. Or five thousand. That’s okay. You’re going to have questions about invoicing, regardless of whether you’ve just written your hundredth invoice, just received your thousandth, or if you’re still trying to find your bootstraps so you can break through the silicon ceiling.
Let this be your guide, answering every question from “what’s the difference between invoicing and billing” to “why the heck does this invoice say net 30” to “why aren’t they emailing me back help me please.”
In this guide, you’ll learn the following key elements of invoicing:
- What is Invoicing?
- The Anatomy of an Invoice
- Payment Terms
- Types of Invoices
- Methods for Paying Invoices
- Formats of Invoices
- How Apps are Changing the Invoice Game
- Simple Invoice Templates
- How to Prevent Unpaid Invoices
- What Happens When Payments Aren’t Invoiced?
- The Future of Invoicing
Excited? Of course you are! Now, let’s jump right in and figure out what invoicing even is.
What Is Invoicing?
As the King said in Alice’s Adventures in Wonderland: “begin at the beginning and, when you get to the end, stop.” In our case, the beginning is very simple. We must define invoicing. (And no, we won’t give you the sarcastic answer that “invoicing is the act of giving someone an invoice.”)
At its most straightforward, an invoice is another concept that you are already surely familiar with: a bill. Probably one of your least favorite concepts, as it reminds you of your rent or your mortgage, your car payments, your heat bill, and your electric bill.
However, to suggest that bills and invoices are interchangeable is overly reductive and simplistic.
So, what’s the difference between bills and invoices?
An invoice is not just a check that comes at the end of a meal or when you pick up your dry cleaning. An invoice is a professional document, including an itemized list of the goods and services provided, the costs of those goods and services and the payment terms for these goods and services.
While invoices can come in a variety of forms—including electronic, app-based, carbonless pads, or personalized invoice books—it’s important for you to understand what aspects of an invoice are expected.
Remember that an invoice is a professional document and it should be treated as such. Like all professional documents with years of tradition and social customs, there are many assumptions and expectations that must be considered when creating an invoice.
The Anatomy of an Invoice
“Rather go to be supperless, than rise in debt.”
Invoicing has a series of components that set it apart from the kind of bill you might receive at a restaurant or bowling alley. Understanding these characteristics is crucial to properly engaging in business.
What information must my invoice include?
- The Date
- The Invoice Number
- The Supplier’s Name
- The Client’s Name
- The Addresses
- The Specific Goods and Services
- The Prices of the Goods and Services
- Total Amount Due
- The Payment Terms
If you want your invoice to get paid—or, if you’re trying to understand an invoice you recently received and need to pay—it’s crucial to understand what each of these components of an invoice are.
- The Date: A legal professional document isn’t much good without a date. The date can become crucial when your startup starts stacking debt, when your runway runs out, or when a freelancer you hired to design your logo starts blowing deadlines. Begin with the date on the invoice, like it’s your tenth grade English homework.
- The Invoice Number: This is a number created by the supplier, for the purposes of tracking the invoice and its payment. This unique identifying invoice number is useful for both supplier and client. It becomes particularly important if you have a variety of very similar invoices that you need to keep track of.
- The Supplier’s Name: If you’re the one who provided the goods or the service, then you’re the supplier. If you’re the one invoicing—and you want to get paid, which you must, because why else would you read a guide to invoicing unless you want your invoices to get paid—then you had better put your name on that invoice.
- The Customer’s Name: The supplier is the guy who did the work. The client is the other guy. Sure, life is about more than money… but when you want your money, you’d better include the customer’s name. Vice versa, if you’re the customer or client and they forgot your name, you should probably let them know to step up their game.
- The Addresses: Your address. Their address. In some cases, an email can suffice, but it’s considered best business practice to include the physical address. You might be tempted to keep it simple and just use an email address, but remember that your proactive professionalism will come back into play when “net 60” comes and goes.
- The Specific Goods and Services: Whether a construction project, a new website design, a revolutionary SaaS software or a really cool skateboard, it’s crucial that you clarify the good or service for which you are invoicing. Be specific and itemize the list. For example an HVAC service invoice form will pre-print their services to save time and improve accuracy. Leave no room for confusion or ambiguity.
- The Prices of the Goods and Services: If you want payment for the goods and services, then you’ll want to clarify the specific prices that correlate with each item throughout the document. Once again, be specific. It’s not enough to just list the goods and then the prices. Be very clear about what items in the invoice are associated with what costs.
- Total Amount Due: It’s not enough to list out every itemized price alongside the good or service with which it correlates. You also have to do the math and tell them what it all adds up into. Do not expect your client to do the math.
- The Payment Terms: Here’s the good stuff. The details like “net 30” and “due upon receipt” and “line of credit”. (And if you’re unsure what those mean, well, it’s good you’re reading this guide). This is why you included your date at the beginning of the invoice. Because if you want the money in 30 days—or immediately upon receipt of the invoice—then you’re going to need to let them know what day it is.
While the above list gives you the basic overview of the aspects of an invoice, you still might have some questions. Particularly regarding payment terms.
“Money often costs too much”
-Ralph Waldo Emerson
Most components of an invoice are reasonably straightforward. You know what dates are. What clients are. What an address is.
But what about that last pesky little bullet point? Payment Terms, huh? That might even be what sent you scrambling to this Complete Guide to Invoicing. Trying to understand your payment terms—the ones you’ve written, the ones you’ve received, and the ones you’ve yet to encounter.
What are payment terms?
In the context of invoicing, payment terms define the amount of time in which the invoice must be paid and the way in which the invoice should be paid.
Some of the most common payment terms include:
- Immediate Payment
- Cash on Delivery
- Payable on Receipt
- Due upon receipt
- Net 10
- Net 15
- Net 30
- Net 60
- 2/10 Net 30
- Line of Credit
Unsure what all of these payment terms mean? Or how to respond to them?
Perhaps you’ve received an invoice that contains one of these payment terms, or perhaps you can’t determine which one to use. Keep reading for the definitions of these specific payment terms, when to use them, and why.
Payment Term Definitions
If you want your invoices paid—and if you want to properly respond when someone sends you an invoice—then you’ll have to know what each of these various terms mean.
- Immediate Payment: An invoice will say “immediate payment” under the payment terms when the payment is expected upon delivery of the invoice. Again, this is why it’s crucial that all invoices are dated. It’s also why all invoices must have details for the goods and services. If the invoicing party wants immediate payment upon delivery, all the details must be provided in a professional manner.
- Payable on Receipt: An invoice whose payment terms include “payable upon receipt” is as intuitive as it sounds. The client is expected to pay upon receiving the invoice, just like “immediate payment”.
- Due Upon Receipt: This payment term means the same thing as “payable upon receipt” and “immediate payment.” It’s an unambiguous expectation that the invoice will be immediately paid.
- Cash on Delivery: Similar to “immediate payment”, but often used for retail rather than professional invoices. “Cash on Delivery” has largely become replaced with the initialism COD, which often indicates “Collect on Delivery”. COD is commonly used in cases when the invoicing party needs to clarify that, if the payment is not provided the good will be returned to the seller. The major difference between this and “due upon receipt” is that this refers to the delivery of the good while “due upon receipt” refers to delivery of the invoice. COD is also largely used in the context of shipping, like on auto transport bill of ladings, which are specific situations where the customer did not pay in advance of the shipment.
- Net 10: Many payment terms are written with “net” preceding a number. This convention is known as Net D. The number following “net” refers to the number of days the client has to pay in full. Net 10 is the shortest conventionally used payment term using this convention.
- Net 15: Another common payment term, giving invoiced party just over two weeks.
- Net 30: Arguably the most common payment term in the business world. It’s important to note that Net 30 does not mean the same thing as “pay within one month” or
- Net 60: A relatively rare payment term. Most businesses choose not to use this payment term when invoicing, as 60 days can be a long time to wait for a payment.
- 2/10 Net 30: Variously notated as “2% 10, Net 30” or “2/10, Net 30”, this indicates that the payment is due within 30 days but a 2% discount is applied if paid within 10 days.
- Line of Credit: An unusual payment term to see in small or even midsized business invoicing, “line of credit” is used in situations where the client or buyer has an ongoing (often monthly) invoice.
Remember that the above is not a list of every possible payment term, but that all payment terms should follow the conventions spelled out above. For example, an invoice may read “Net 90”. This only means that the invoicing party is choosing to give the client 90 days to pay. An unusual choice, but if you’re writing the invoices, you have the option to give that amount of time. Many templates will include payment terms but if they don’t, printit4less.com is a printing company that offers custom forms where clients can request changes- and these changes can be important if your business needs to use a specific payment term!
Now, let’s consider some of the factors that should go into your decision when choosing which payment terms to include.
Choosing the Right Payment Terms
Which payment terms should I use in my invoice?
Even if you understand all the standard payment terms, it can be challenging to apply these terms to your specific situation. If you’re the one on the receiving end of an invoice, it’s easy enough to respond: follow the payment terms as described above.
If you’re the one designing the custom form, it can be a bit trickier. You want your money, but you want to maintain a professional dynamic while also establishing a situation where, if the payer does not pay, you have recourse. The question is this: which payment term to use?
When should I include “immediate payment” or “due upon receipt” in my invoice?
As established above, these payment terms indicate that payment is expected upon delivery of the invoice. Opt for this option when you’re a very small business, a freelancer delivering small projects, or some other situation where immediate payment makes a major difference to your financial situation.
The greatest risk in opting for “due upon receipt” is that it can surprise the client, which in turn can damage the future working relationship. However, if you are a small business, a freelancer, or a scrappy startup, “due upon receipt” should not come as a major alarm to the client—especially if you’ve already communicated that this is to be expected.
When should I include “COD” on my invoice?
As discussed above, “Cash on Delivery” or “Collect on Delivery” initially sounds similar to “due upon receipt”. However, this payment term has a more nuanced position in business, as its often used to describe a specific form of transaction, rather than a payment term.
If used in an invoice, COD indicates that the supplied good or service will be paid for immediately upon its delivery. In many cases, the purchaser will pay not the supplier, but instead the intermediary, such as a courier or shipping company. COD is largely used in the context of shipping, more than in the context of invoicing. COD is most commonly found on bills of lading forms.
In most cases, “due upon receipt” is the payment term to opt for, rather than COD.
When should I use Net 30 on my invoice?
Within the Net D convention, Net 30 is the most common payment term to use. For that reason alone, it can often be the best choice. Buyers and clients appreciate having 30 days to provide payment, which can help maintain a positive business relationship.
When should I use Net 10 or Net 15 on my invoice?
Net 10 and Net 15 are used when payment is not needed immediately but 30 days could be too long to wait. While not as common as Net 30, either Net 10 or Net 15 are accepted within the business world as standard.
When should I use Net 60 on my invoice?
This works in the same style as Net 30, but you may opt for this when payment is not crucial immediately for your company’s success and you would like to maintain an even more positive dynamic with clients and buyers.
When should I use 2/10 Net 30 on my invoice?
This can incentivize early payment while still allowing clients 30 days to pay in full. Good for relationships and ensuring payment, which can potentially lead to more longer-term work.
Is that everything we need to know about payment terms?
Close, although there is still a lingering question: what if they still don’t pay? A good question, and one that we will get to.
Before we get to the troubleshooting that can surround invoices, let’s consider some other logistics of what an invoice should look like and how it should work. Right now, we know the ingredients for an invoice, but that does not mean we know all the forms an invoice can take.
The Most Common Types of Invoices
“Never spend your money before you have it.”
While all invoices contained specific elements, they can come in many shapes and sizes. The most common invoices include:
- Standard Invoice
- Interim Invoice
- Pro Forma Invoices
- Commercial Invoices
- Recurring Invoices
- Final Invoices
- Past Due Invoices
Some of these seem straightforward enough. It’s easy to imagine what a “past due invoice” might be. However, there’s a good chance that you’ve never encountered a few types of these invoices, or that you aren’t sure what defines them.
Let’s consider the definitions and uses of each of these invoices.
A standard invoice is what it sounds like: a professional document, including an itemized list of the goods and services provided, the costs of those goods and services, and the payment terms for these goods and services. In this context, “standard” simply means that there is nothing special or extenuating about this invoice. Something straightforward and convenient.
A standard invoice can include invoices between people, rather than companies or corporations. Like many aspects of the world of invoicing, the standard invoice is defined by both what it is and what it isn’t. The rest of this list includes other non-standard invoices, which help bring clarity to what makes one standard.
We recommend scrolling up and referring back to the “Anatomy of an Invoice” section to remind yourself of all those pieces of an invoice.
Interim Invoice (or Progress Invoice)
An interim invoice (or progress invoice) is used in situations in which the work stretches over a long time span from start to finish. An interim invoice will be sent at regular or intermittent dates throughout the project to both update the customer on the project and to get payments from the customer.
Website projects, construction projects, and other large-scale ongoing projects will use interim invoices, assuming that the customer has an understanding of what progress looks like and is comfortable paying throughout the project.
One risk of interim invoices is that some customers will be surprised by paying for progress, particularly if they are not used to receiving progress invoices for the type of work for which they are paying. Interim invoices are only recommended if the customer is comfortable with them and if it makes sense in the context of the project.
For an extreme example, a progress invoice for a restaurant bill or car repair would exceedingly confuse the customer and damage the relationship irreparably (or result in a good laugh.) On the other hand, a progress invoice for a major construction project would make perfect sense to all parties involved.
When should I use progress invoicing?
There are several key advantages for using progress invoices, including:
- Keeping customers abreast of progress: The greatest advantage of progress invoicing is that customers will have a thorough understanding of the work’s progress.
- Income for the supplier: Progress invoicing isn’t just advantageous for one party. The customers will be kept in the loop for progress, while the supplier will have income throughout the project. Additionally, employees and subcontractors will have consistent income throughout the process.
When shouldn’t I use progress invoicing?
There are a few risks inherent in progress invoicing:
- Potentially inappropriate and irrelevant: In many situations, progress invoices simply don’t make sense. As noted above, progress invoices are a natural fit for many projects. For others, they make no sense and would do serious damage for the professional relationship. (Again, imagine if you received a bill for your appetizer before the entrée had arrived.)
Still not sure what an interim invoice looks like? An interim invoice can have all the makings of a standard invoice but used with a different intent and sometimes different verbiage. It’s all in the wording like on this contractors invoice form that can be used as an interim invoice – modify the terms and use the check mark to denote whether it is to be paid in full or partial.
A pro-forma invoice is sent from the supplier to the client in advance of the final delivery of goods or services. Unlike a quotation, a pro-forma invoice is typically a binding agreement for the purpose of approving both work and prices.
While a binding agreement, pro-forma invoices are also subject to change. A pro-forma invoice is not presented with the expectation of payment, but to provide the necessary information for parties to move forward with the work appropriately.
Caution is advised when using pro-forma invoices, as clients will expect the final invoice to closely resemble the prices provided on the pro-forma invoice.
Pro-forma invoices are also relevant in the use of foreign trade (see “Commercial Invoices” below for more information.)
When should I use pro-forma invoicing?
When considering using pro-forma invoicing, it’s important to understand the advantages:
- Establish pricing: There’s nothing worse than an invoice that arrives as a shock to anyone involved. A pro-forma invoice eliminates this nightmare from becoming a reality, by clarifying the expected ultimate price.
- Establish expectations regarding work: In addition to the prices, the itemized goods and services in an invoice should not come as a surprise for anyone. Identifying them during the pro-forma invoice is a great opportunity to add some clarification around what work will be provided.
- Binding agreement: Pro-forma invoices are binding agreements, while simultaneously allowing room to change and evolve over time.
When shouldn’t I use pro-forma invoicing?
It’s important to consider the risks in pro-forma invoicing:
- Potential confusion for the customer: If poorly communicated, a pro-forma invoice can be mistaken as either a quotation or a contract. When pro-forma invoicing is used, it’s crucial that all parties understand exactly what is occurring.
- Project drift: This is a larger issue than something that can be solved here and now, but many pro-forma invoices can be made irrelevant when the project changes scale.
To put it plainly, a pro-forma invoice is a confirmed purchase order that ensures the buyer and seller are in agreement to the services being rendered.
A commercial invoice might sound like any invoice between two businesses. However, it has a specific, significant meaning when used in foreign trade. In the context of international trade, a commercial invoice indicates a customs declaration provided by the exporting party.
Commercial invoices must include all the aspects of a standard invoice, while additionally including appropriate identification numbers, notes, comments, and information on the country (or countries) of origin.
In general, it’s smart to leave the words “commercial invoice” out of regular invoicing conversation, unless it’s for the specific purpose of foreign trade. If someone requests a commercial invoice from you, it’s appropriate to immediately ensure that all the rules and regulations for the relevant countries are being followed.
Finally, please note that, in many cases, commercial invoices are not for payment. They accompany trades as documents ultimately used for taxation purposes. There should still be a separate standard invoice that covers that payment aspects, while this covers the trade regulations and taxations aspects.
When should I use a commercial invoice?
If dealing with international trade and customs, a commercial invoice is not an option that can be pondered or voted against. If a commercial invoice is required—and, if you’re wondering, then it probably is—then you’d better use a commercial invoice.
When shouldn’t I use a commercial invoice?
Commercial invoices are not something to be treated lightly. It’s important to understand that, in most cases, a commercial invoice is not for payment. A commercial invoice template should be carefully used in the construction of the appropriate documentation.
A recurring invoice is an ongoing, often automatic invoice provided for ongoing goods or services. One of the major advantages of recurring invoices is that they can be a way to automatically charge customers.
Recurring invoices do not make sense for one-time projects. They are also not to be mistaken for progress invoices or interim invoices, which are used in situations for large scale projects.
SaaS software, subscription services, ongoing utilities, and other monthly or annual services are typically covered by recurring invoices.
When should I use a recurring invoice?
Use recurring invoices when providing any kind of ongoing service. For an example that almost everyone is familiar with, consider Netflix or Spotify, both paid through automatic monthly payments. These are not literally recurring invoices—as recurring invoices are not automatic payments, often still requiring work on the receiving end—they are very similar in nature.
When should I not use a recurring invoice?
Recurring invoices are often inappropriate for project-based work. Even for major projects, a better option is to opt for interim invoices (or progress invoices) rather than recurring invoices.
The final invoice occurs at the end of a project. A final invoice should reflect the payment expected by customer, while reiterating the provided goods and services.
Recurring invoices and final invoices are often mutually exclusive, as a final invoice will be provided at the end of a project and a recurring invoice will be provided for an ongoing service without an established end date. However, one might say “final invoice” when referring to the last in a series of recurring invoices.
When should I use a final invoice?
When the job is done and you’re ready to get paid. This one is simple, straightforward, and relatively unambiguous.
When should I note use a final invoice?
When things aren’t final. This is something serious to consider: don’t jump the gun and send the final invoice before the projects are complete, just as you don’t want to pay a final invoice before you’re satisfied with the work.
Past Due Invoices
Past due invoices are exactly what they sound like: invoices sent to professionally remind customers that payment is still expected. No one ever wants to send or receive a past due invoice, but they are an unfortunate reality of the world we live in.
For more on the unfortunate past due invoice, see the “What Happens When Invoices Aren’t Paid?” section below.
When should I use a past due invoice?
When they haven’t paid and you’re concerned they won’t pay without another invoice.
When shouldn’t I use a past due invoice?
This one is simple: don’t use a past due invoice unless the payment is legitimately past due. Again, this is why you date your invoices and use clear payment terms. You could create some serious trouble if you start sending past due invoices preemptively.
Methods for Paying Invoices
“I think professionalism is important, and professionalism means you get paid.”
As everyone knows, the invoice isn’t the done deal. The money still needs to come through. And whether you’re the invoicer or the invoicee, it’s important to know all the ways that the money can exchange hands.
Take all of the following methods into consideration as you build your invoice forms. Clients like to know upfront how you expect to get paid. It will be beneficial for you, your client and your employees to list accepted payment methods on your job invoice form.
Paying an Invoice with Cash
While the first option we are mentioning in this list, paying an invoice with literal cash, is probably only relevant for small or one-off projects. A major construction project, website, album cover or ongoing SaaS service is not something one would pay for in cash without drawing confused looks or baffled comments. Worst of all, by not leaving a natural paper trail, cash can cause various issues.
However, paying an invoice with cash is often a normal process for relatively small or informal transactions.
Paying an Invoice with Check
Checkbooks were once the king of invoice payments, but are now generally regarded as an antiquated payment option. Unlike cash, they leave more solid paper trails, but similar to cash, there can be challenges and difficulties inherent with using checks.
Paying an Invoice with Bank Transfer
Bank transfers are commonly used in business transactions. These can be the go-to option, often referred to as ACH (Automated Clearing House) or EFT (Electronic Funds Transfer). Sometimes a bank transfer can be tricky at the beginning, as it requires more effort on the part of the paying party, but can become the easiest and smoothest option as time goes on.
You may recall the recurring invoices mentioned above. These would be unwieldy if paying with a check or cash, but bank transfers are a natural fit.
Paying an Invoice with Credit Cards
A common choice, particularly for ongoing B2B services or SaaS. Easy for both customer and supplier. The biggest advantage is ease, while the biggest disadvantage can be the fees associated.
Paying an Invoice with Online Options & Apps
Venmo, Square, and PayPal are all continually disrupting the way we do business. And lucky for us: without PayPal’s disruption, we wouldn’t have the ongoing madness of Elon Musk’s social media presence.
It’s up to you whether you want to make these an option or not. In some cases, they may charge fees, but these fees could be lower than those associated with credit cards. Furthermore, their disruptive properties are continually attractive to your customers and clients through their ease of use.
Paying an Invoice with Cryptocurrency
This might seem odd, particularly because it’s not just a disruptive technology but an entirely different currency. It’s up to you whether you want to allow for this or, if it’s allowed in an invoice from a supplier, whether it’s the way you’d like to pay.
Formats of Invoices
“Fill your paper with the breathings of your heart.”
Now that we are clear on the components of an invoice and the various forms invoices can take—including that tricky concept, payment terms, which should be much, much clearer now—let’s talk about some best practices for invoicing and how to choose between paper and digital.
The Evolution of the Invoice
It’s worth pausing, momentarily, to consider how far the invoice has evolved in its thousands of years on the planet. Many scholars and invoice enthusiasts (yes, believe us, there is such a thing) cite invoicing’s roots as dating back to ancient Mesopotamia. That’s right: invoices have the same origin territory as the Code of Hammurabi, but they’re even older.
Obviously, such invoices weren’t digital. It may surprise you that they weren’t paper, either. Ancient invoices were often created on stone or clay tablets (again, just like Hammurabi’s Code.)
The word ostensibly comes from Middle-French, with the same Latinate family tree as the word envoy. It first cropped up somewhere in the 1550s. An envoy, you may recall, is a messenger, ambassador, or representative, often on a mission of some importance. Of course, it’s up to you if you choose to employ envoy to deliver your invoices.
Electronic invoicing originated during the 1960s, when companies exchanged data related to invoicing via the Electronic Data Interchange (EDI). Beginning in the 1990s, companies began using more technologically advanced methods to exchange and pay invoices. The invoice is no longer confined to paper, often appearing as a PDF attached to an email. It can arrive via an app on your smartphone or an SMS. In many cases, invoices are created today via pre-existing templates, fillable PDFs, carbonless invoice pads or personalized invoice books.
Obviously excluding stone tablets, the most common forms of invoices today are either printed or electronic.
Advantages of Printed Invoices
When considering whether to use printed invoices or electronic invoices, it’s worth considering why someone might still choose to use a paper invoice. Obviously, they have survived until now, several decades after the ascent of email and the internet. But does this mean that they have their advantages, or that people are simply clinging to the past?
There are arguably several key advantages to printed invoices:
- Professionalism: In some industries—particularly those that are more conventional and conservative—both suppliers and customers are trepid about using electronic invoicing, as it can seem both informal and unprofessional. However, this is something increasingly irrelevant as the world moves forward.
- Ease: In the mind of some suppliers and customers, a printed invoice can initially seem easier. This is a reason to proceed cautiously if you are considering introducing electronic invoicing into a situation that has not already operated with e-invoicing.
- Practicality: Depending on your industry, a physical form may be more practical based on the amount of information that needs to be presented. For example, a towing company may find it difficult to jam the required road service checklist with all the liability wavers onto a small tablet screen.
- Physical paper trail: Whether using carbon copies or the United States Postal Service, printed invoices do create a natural paper trail. Of course, electronic invoices do as well, although it’s of a different nature.
- Cool, exciting designs: The business world is awash with printable invoice templates that one can easily use and appropriately apply to your invoicing needs. While this can seem like a flourish or garnish, anyone who has ever received a fun invoice in the mail knows that there can be something fun about an invoice accompanied by levity and humor.
- Cost: In many cases, a printed invoice will be cheaper to create and provide than one created electronically.
- Durability: this also ties into practically and cost but the kind of business you’re in may determine what kind of form you need. printit4less.com offers printed forms for every industry and should one be damaged in the field, forms are easier to print than tablets are to replace!
But don’t make your decision yet. Electronic invoices offer some advantages that must also be considered.
Advantages of Electronic Invoices
Electronic invoicing has existed in various states since the 1960s, but many companies might proceed cautiously regarding e-invoicing. Some of the advantages of e-invoicing include:
- Ubiquity: Where electronic invoicing once seemed like something that would blow over in time, it has proved itself to have the staying power of email, streaming, and the internet as a whole. According to the 2012 Global E-Invoicing Study, 73% of respondents as of 2012 had used some kind of electronic invoicing in that year. As of 2018—six years after the study—the number has only trended up.
- Reduces Inefficiencies: Printed invoices can create additional costs and inefficiencies, both from the creation of the invoice and the manual invoice processing that occurs at the customer end.
- Elimination of Errors: When things exist only in paper—like the stone tablets of old—there is a higher likelihood of manual mistakes, duplication of information, or increased chances of miscommunication. Electronic invoicing solves for these issues, particularly when a standardized process and template is incorporated into the process.
- Improved Paper Trail: Like many electronic options, e-invoicing builds a stronger paper trail for all parties involved.
- Automated Matching: It’s crucial that the invoice at the provider end match the expected invoice at the customer end. With electronic invoicing, this matching is streamlined and improved so that there will not be confusion between which invoice lines up with project or PO.
- Apps: Electronic invoicing has come a long way, but perhaps nothing more notable in the last several years than the rise of apps for invoicing.
The Golden Rule of Printed and Electronic Invoicing
At the end of the day, there is one rule that matters above all for invoicing: the printed version and electronic version must agree with one another. If they do not, then everything is at risk. So, do your due diligence and find the solution that works for you, but ensure that you do not have discrepancies in the information contained in the invoices.
It’s worth noting that whether using electronic invoicing or printed invoices, there are a number of invoice templates that can be used for various purposes.
How Apps are Changing the Invoice Game
“Any sufficiently advanced technology is indistinguishable from magic.”
-Arthur C Clarke
At this moment, we must pause and acknowledge that invoices have moved beyond the confines of simply “printed invoices” or “electronic invoices.” As noted, electronic invoicing has existed since the 1960s in various forms, reaching exponentially wider markets with the advent of the internet in the 1990s from niche concept to household name.
But it’s not the internet that sparked the latest invoicing revolution. The current state of invoicing has seen its evolution due to the rise of the smartphone and, with it, the apps.
How Apps Have Disrupted Electronic Invoicing
To understand how the world of invoicing has changed due to the rise of apps and smartphones, it’s worth considering the extent to which basic human communication has changed over the last several thousand years.
Once upon a time, the only way for two humans to communicate was if they were in the same room together. Then came the written word, transferred by stone or clay or paper. Fragile, expensive, and slow. Sure, mail evolved over time—all roads lead to Rome, the Pony Express, passenger pigeon, etc.—until the internet and email came along and changed everything.
But accompanied by the internet was the rise of the smartphone, the messenger apps, and social media. These might initially seem entirely unrelated to invoicing—as who in their right mind would send an invoice via a messenger app, amirite—but the potential in this realm is consistently trending upward.
Consider a few of the ways that apps are being integrated into the invoicing process:
- Accounting Software Integrations
- Automatically Generated Invoices
- Invoices Integrated with E-Commerce
- Fillable Invoice PDFs
- “Pay Now” Buttons
- Payment Reminders
- Simple Invoice Templates
Trying to determine if one of these is right for you? While this isn’t a platform for rating or reviewing apps—as there are plenty such venues already out there—we will discuss some of the pros and cons of these general concepts, including how they might benefit you.
Accounting Software Integrations
Chances are high that, if you’re writing invoices, doing your taxes, and running a small-to-midsized business, you’re well-acquainted with one or another of the major accounting software options.
What you might not realize is that there are various apps whose entire purpose is making your life easier when it comes to using your accounting software. Many of these are “cloud-based”, meaning they come in the form of either progressive web apps or apps that integrate seamlessly into your existing software.
Many of the other invoice-related apps on this list can integrated simply with the accounting software you might already be using. However, it’s worth noting that, even if you don’t use any kind of accounting software, you can still easily implement and integrated various apps into your invoicing process.
Apps for Automatically Generating Invoices
These come in many shapes and sizes. Sometimes they’re already integrated into your payment system, being spit out by your tablet or smartphone without a moment’s thought. Of course, you may want to be careful before you go charging too far into the brave new future with this one.
First, weigh your options and consider if this is something that will make your life easier and more efficient. Second, consider how your customers will respond. If it still seems like a good idea, then go right ahead and make it happen. For many small businesses, using smartphone and tablet apps to generate invoices is a major timesaver and huge efficiency boost, while also cutting down on the margin of error.
Apps for Integrating Invoices with E-Commerce
Do you have a website through which you sell goods and services? In some situations, you may choose not to take payment directly via the web at the time of the initial transaction. Some freelancers and small businesses would rather treat their e-commerce as more of a quotation service, to then following up afterward with the customer regarding specifics, contracts, and invoices.
In these cases, it can be ideal to have some kind of integrated functionality that allows for quick, efficient invoicing based on the information gathered via your website’s e-commerce. Various apps can be assist with this process, with integration across your accounting software, website, email, and smartphone.
Apps for Fillable Invoice PDFs
Sure, a fillable PDF might not be the first thing you think of when you hear “apps.” Fillable PDFs are to your contemporary smartphone app as a bicycle is to a Tesla. That said, there are still distinct advantages to using a bicycle over a Tesla. In some cases, it will get you there faster, easier, and perhaps even happier.
Sometimes simplicity is king. If you can find a fillable PDF that suits your needs—while still checking every box in the Anatomy of an Invoice section above—then go right ahead and use it.
“Pay Now” Buttons
This is the type of thing that would have sounded like absolute madness if someone suggested it 30 years ago. What would a button do inside an invoice? What do you mean, a button?
Today, it only makes sense. You may recall the various options discussed about in the “Methods for Paying Invoices” section. Where once cash and checks were the main options—and, before that, the only options—we have moved into the world of instant gratification in all things, including the payment of an invoice.
Invoices can be accompanied by “Pay Now” buttons when provided via email, PDF, or various invoicing apps. It’s just crucial to ensure that you have done your due diligence and that you are meeting the customer somewhere they’re comfortable. You do not want to fire off a digital invoice with an integrated Pay Now button without confirming that’s something your client can use. Believe it or not, some people don’t have, use, or like smartphones. (Or perhaps you’re even one of those people?)
It’s not just about getting the client’s money, as we’ve repeatedly said. It’s about maintaining a positive relationship where the two of you will want to work together in the future.
And if you’re a customer who has come here trying to figure out how to pay your darn app-generated invoice with its Pay Now button and slick integrations, remember this: you can always just call the supplier back and tell him you’d like something faxed to you.
Automatic App-based Payment Reminders
This one should make sense to you right away. It’s how you remember your doctor’s appointments, your oil changes, your haircut: automatically generated text messages, emails, and maybe even voicemails, all ensuring that you don’t forget that important thing you were supposed to do.
Using apps to create invoice payment reminders is one of the best ways that both supplier and customer can win. It’s so good that you might even call it winvoicing (and no, somehow, that doesn’t appear to already be an app. Get on it kids.) It’s convenient, polite, professional, and even courteous.
If you are currently trying to ease into further integrating technology into your invoicing process, try using automatic invoice payment reminders.
The Advantages and Risks of Using Invoicing Apps
There are several major risks that must be considered before you jump in feet-first on introducing a new software, smartphone app, or other disruptive technology into your invoicing process.
What are the risks of using invoicing apps?
The three greatest risks of invoicing apps are:
- Professionalism: As mentioned above, consider the possibility that the customer uses a landline or a flip phone. Perhaps they prefer their trusted fax machine. Sending a souped-up invoice (with or without emojis and fireworks effects) could really rub the client the wrong way and potentially derail the entire working relationship.
- Logistical Issues: This can be on the end of both sender and receiver of an app-generated invoice. Don’t send an app-generated invoice without ensuring that you can handle all the aspects of it on your end.
- Unpaid Invoices: Of course, this is one of the risks in all things invoicing. There is always the possibility, just like with any conventional form of invoicing, that the client will not pay. In the case of using apps for invoicing, you are potentially arming your unpaying customers with a new excuse.
Remember this, too: if you’re a customer on the receiving end of a Dadaist invoice rife with winking faces and peace signs, feel free to let the supplier know that you’re going to need something a bit more professional.
What are the advantages of using invoicing apps?
The advantages of using apps for invoicing are manifold. Here are a few to consider:
- Professionalism: You might be thinking “wait a minute: didn’t they list professionalism as a risk of using apps for invoicing?” Yes, we did, because the truth is that it’s both a risk and a benefit. In today’s marketplace, people expect to be able to pay their invoices quickly and to their own liking. For many, that involves the option to use their favorite application on their handheld device.
- Seamless integration across channels: From the accounting software to the Excel spreadsheet to the smartphone app, all with minimal effort. This is the future, folks. Might as well take advantage.
- Payment Reminders: This one can’t be stated enough. It will help remind your customers who like reminders, while eliminating an excuse for those who would otherwise dodge you.
At this point, you could be feeling overwhelmed with all these options and opportunities. Which makes this a great time to consider all the invoicing templates available out there.
Simple Invoice Templates
“Invoices are difficult without templates”
-Ancient Invoicing Proverb
Whether on your smart device, via a web app in your browser or through a printing company, there are many ways to find and use simplified invoice templates for your invoicing needs.
As established by this guide so far, it’s important to get invoicing right. In order to do that, it’s important to format your invoice correctly.
While the Anatomy of an Invoice section above makes it clear what information your invoice must contain, you still might want to use a pre-existing template created by a third party for your invoice.
Invoice templates can come in various shapes, sizes, and formats. It’s important to consider your full breadth of options before determining what is best for your specific needs.
Types of Invoice Templates
Some of the most common invoice templates include the following:
- Microsoft Word Invoice Templates
- Microsoft Excel Templates
- Google Drive Invoice Templates
- Invoice PDF Templates
- Custom Duplicate Invoice Books
We will run through each of these, alongside its advantages and risks. However, before we get into that, we should review why you might consider using an invoice template in the first place.
Advantages of Using Invoice Templates
One thing you’ve potentially asked, at some point, is why are invoices so boring to look at? The answer is two-fold. The first answer is that they have to be, to get the job done. The second answer is, well, that they don’t have to be.
Did we contradict ourselves? Very well, we contradicted ourselves. Let’s explore what this really means: in short, many invoices are boring because it’s the way to keep things professional, to get the invoice paid, and to ensure that you didn’t miss any of the crucial ingredients of the invoice recipe.
The greatest advantage of using invoicing templates is that it’s a way to capture all those aspects of an invoice without worrying about either missing anything or compromising professionalism.
Microsoft Word Invoice Templates
There are many excellent invoice templates available for Microsoft Word. Like document templates of all varieties, you can download the template to your desktop or laptop computer. The greatest advantage of using a Word template is that it can be easy to insert your own custom letterhead and format the invoice to appear professional. Additionally, it’s simple and straightforward to convert a Word document to a PDF.
Microsoft Excel Templates
If the idea of an invoice template in the form of a Word document makes you cringe, then an Excel template is probably the answer for you. You can find an Excel spreadsheet template for almost any use. If you can’t find the exact one you need, then it’s likely you’ll be able to tweak an existing one into exactly what you need with some elbow grease and the right equations.
Google Drive Invoice Templates
If the Microsoft Office Suite isn’t your thing, then Google Drive probably is. Simple invoice templates abound, ready for you to drop right into either Google Docs or Google Sheets. While some of the capabilities of Docs and Sheets can differ from Microsoft Office Suite, you’ll often find that the right add-ins can make anything happen in Google Drive. Additionally, if you’re the type who closes without saving, Google Drive’s functionality has you covered.
We already discussed the advantages of fillable PDFs in the app-based invoicing section above. A few things to consider, if you’re looking to shoot a nice, clean PDF to your customer’s email inbox:
- Any template for Microsoft Office or Google Drive will easily convert to a PDF.
- You should absolutely send an invoice as a PDF form, rather than as a document or spreadsheet that can be edited by another party.
- You can find existing invoice templates already in PDF form, if you are looking for something you can fill out either manually or electronically then present to a client. This is not a practice for enterprise situations, but can work for small or freelance projects. However, even then, you are better off going the extra few inches and using an existing template that didn’t begin life as a PDF.
Custom Invoice Books
Custom Invoices book templates can be created using any of the above methods or purchased from printing companies like printit4less.com. These templates are printed on carbonless paper and either bound into books or the copies are glued together.
This is a common practice, particularly in situations where you will be creating invoices manually, daily, or while in the field.
Some advantages of custom invoice books:
- Professionalism and efficiency, with technological efforts in advance of the manual creation of invoices.
- On-the-spot invoice creation, using invoice templates you customized yourself.
- The ability to design a custom invoice book yourself, purchase a customizable form by industry from a printer or hire a designer, in advance of its printing.
These can also be known as carbonless invoice books, custom duplicate invoice books, or No Carbon Required (NCR) books.
Now that we’ve covered some of the most common invoice templates out there, let’s consider the dark side of invoicing: what happens when they don’t get paid.
How to Prevent Unpaid Invoices
“Being poor is a disease; gotta hustle up a cure”
One of the great questions of our day-and-age is this: “How do I deal with a slow-paying client while not breaking my professionalism?”
While that’s a crucial question to ask—and yes, indeed, we will answer it—there is an equally important one that you should ask before you get to that stage: “How do I prevent unpaid invoices?”
What should I do to avoid unpaid invoices?
- Avoid clients who don’t pay.
- Use pro-forma invoices.
- Use contracts.
- Get a deposit.
- Send reminders to pay invoices before they’re unpaid
- Track invoices
Let’s consider what’s involved in each of these aspects.
Avoid Clients Who Don’t Pay
Easier said than done, right? If we always knew which clients wouldn’t pay, then life would just be dandy. Suggesting getting your invoices paid is as easy as “avoiding clients who don’t pay” is as useful as saying “you should have brought an umbrella” during a torrential downpour.
That said… you can do some research to ensure that a client is the kind who pays. Ask around, investigate their reputation, and ensure they don’t have a history of fleecing their suppliers.
Not that unpaid invoices can be chalked up to questions of ethics. Sometimes start-ups run into issues related to scalability, where they’ve historically paid in cash or PayPal and suddenly they’re dealing with commercial invoices and Automated Clearing Houses.
Use Pro-Forma Invoices
As a reminder: a pro-forma invoice is sent from the supplier to the client in advance of the final delivery of goods or services. They are not the same as quotations, as pro-forma invoices are binding agreements for the purpose of approving both work and prices.
If you’re wondering how a pro-forma invoice can help prevent unpaid invoices, consider them a major step in the right direction toward getting the client aware of what the final invoice will look like. No surprises, no shocks, and no excuses if a client saw a pro-forma invoice early in the project.
The idea of a contract should not be a new one for you. While this is a guide to invoicing, not contract writing, we won’t go too deep into the logistics of this one. However, it’s worth remembering that using a contract or a payment agreement is a big step toward preventing that unpaid invoice.
A contract will also contain many of the same elements as an invoice, including details surrounding the deliverable and its cost.
Get a Deposit
Here’s another big step in preventing an unpaid invoice at the end of a project: get some of the payment before the end. In the case of a deposit, this is most often at the very beginning of a project or new client relationship. For freelancers and small businesses, a deposit can be an excellent way to immediately cover expenses.
Again, this is a good time to revisit types of invoices, as an “interim invoice” is one option for getting some kind of payment before the end of a project.
Send friendly reminders to pay invoices before they’re unpaid
The value of sending reminders to pay invoices cannot be overemphasized. There’s a reason we’ve emphasized it throughout this guide: reminding a client to pay an invoice is a lot easier than collecting an unpaid invoice. The relationship is still positive and, in many cases, the client will appreciate the reminder.
It can be a lot to keep track of your invoices, particular as you scale up from a startup in your girlfriend’s step-mom’s basement to a midsized business. In order to avoid a stack of unpaid invoices and deteriorating morale from unpaid employees, you should have some kind of system for tracking your invoices.
Using integrated apps and invoicing templates discussed above can be a huge step toward tracking all your various invoices. Regardless of what approach you take to track them, figure it out before the invoices are out and before any of them have gone unpaid.
But what if you did everything right and they still don’t pay the invoice?
You can cover all your bases and still run into trouble. They still might not pay. You might end up in (or already be in) a situation in which the invoices are out there, unpaid, and you have to do something.
If that’s your situation—or if you’re afraid it could be—then have we got a section for you. (Spoiler alert: it’s called What Happens When Invoices Aren’t Paid?)
What Happens when Invoices Aren’t Paid?
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually, then suddenly.”
-Ernest Hemingway, The Sun Also Rises
Is this the moment you’ve been waiting for? Is this what sent you scrambling to this Complete Guide to Invoicing? The threat—or, worse, the reality—of the unpaid invoice?
If so, you’re not alone: one of the biggest challenges facing small business, entrepreneurs, start-ups and freelancers is the unpaid invoice. One unpaid invoice can spell doom for a scrappy startup.
Before you begin, the first thing to do is remind yourself of the pieces of an invoice and the certain kinds. We can assume you’ve already sent the invoice, as you have an unpaid one, but there’s nothing wrong with running over the characteristics of an invoice and the different types of an invoice before figuring out why yours is unpaid?
Did you read it all again? Makes sense? No glaring misunderstandings regarding any of it?
All right, now let’s talk next steps for getting it paid.
What should I do when the customer hasn’t paid their invoice?
- Ensure you sent the right invoice.
- Gently remind the customer of the unpaid invoice.
- Remind the customer again, but less gently this time.
- Send a Past Due Invoice.
- Send another Past Due Invoice, incorporating late fees.
- Send a third Past Due Invoice, with steeper late fees.
- Lawyer Time?
Make sense so far? Let’s dig deeper into each of these steps to consider dealing with the archetypal “slow-paying client” and how to approach them.
Ensure you sent the right invoice
“Of course I sent the right invoice,” you’re saying to yourself, right now, aren’t you? “Would I really be here if I sent the wrong invoice?”
Well, it’s worth asking, because you wouldn’t be the first. Every detail on that invoice matters: the date, the invoice number, your name, their name, the addresses, the goods and services, how much everything costs, and the payment terms. That’s a lot of stuff and if any piece of that is missing, inaccurate, or out-of-place, then it could jeopardize everything.
Next, ensure that you sent the right type of invoice. Did you send what you meant to? Does it make sense? Is it formatted correctly? If all of this checks out, then proceed to follow-up measures to get the invoice paid.
On the other hand, it could turn out that something is wrong with that original invoice. If that’s the case, correct it ASAP and get the right one into the customer’s hands.
Gently remind the customer of the unpaid invoice.
You want them to pay. You need them to pay. And you’re quite certain that the invoice you sent was rock solid. Bulletproof. A work of art, templated and structured with the same skills and craftsmanship as the Sistine Chapel. All the requisite information, all the necessary details. You crossed every t and dotted every lower-case j.
So, why haven’t they paid that invoice yet?
First, consider that they don’t regard it as an unpaid invoice and rather an invoice they just haven’t quite gotten around to paying yet. There’s a legitimate possibility that, for this customer, money is tight. And while that might be a reason to avoid working with them in the future—as you can’t be taking on clients who won’t foot the bills—it won’t get you out of this pickle.
The answer, in this case, is to reach out to the client, with either a phone call or an email. If you do opt for a phone call, it’s likely that you will have a polite conversation in which the client ensures you they will be paying the invoice shortly. Regardless of how the phone call goes, follow up with an email. This gives you the paper trail you need in case they don’t pay. It all increases the chances that they will pay, as they can’t use I forgot as an excuse.
Reminder the customer again, but less gently this time.
Uh oh. We’ve reached the third step; in which we are doing the exact same thing we did in the second step. This time, it should be less gentle. If you were soft and friendly previously, it’s time to be more direct. You need that money and they need to pay you. Okay, don’t be that direct, but make it clear that the invoice is past due.
Send a Past Due Invoice
You may recall the Past Due Invoice from the section above on Types of Invoices. This is not an invoice that anyone ever wants to send. It’s also not an invoice that many people can avoid sending, unless you’re the type to avoid conflict altogether.
Remind yourself what a Past Due Invoice is: an invoice sent to professionally remind customers that payment is still expected.
This is not the time to tiptoe softly. This is the time to create a professional document that includes all the information typically included in an invoice, while additionally clarifying that, yes, there is already another unpaid invoice out there.
Something else to consider at this point: e-invoicing has its advantages in this realm, as one can more easily point to electronic invoices when reminding the customer that payment is overdue.
If you’re considering incorporating late fees, it’s perfectly acceptable to add them into the very first Past Due Invoice. It will ultimately be your call whether you would like to incorporate them the very first day payment is late or if you would like to give the customer more time.
Send another Past Due Invoice, incorporating late fees.
This is what it sounds like. Late fees should not be something created on the spot, at this point, but something you have considered from the very beginning. Perhaps you even included late fees in the contract or payment agreement at the beginning of the project.
If you’re adding on late fees not listed on the original invoice, proceed with caution. If you blindside your customer with a late fee, you can probably kiss your money goodbye. Making the client angry isn’t going to win them over or worse it might give them the wrong impression that you’re making things up as you go. Treat this as a warning and give them, for example, “Net 10” before the late fee kicks in.
Send a third Past Due Invoice, with steeper late fees.
The longer an invoice goes unpaid, the less likely it becomes that it will ever be paid. There is a line that must be walked at this point, between ratcheting up the late fees and keeping the payment at a number likely to be paid.
Let’s be clear about something right away: this was not written by a lawyer. This is not legal advice. This guide is not going to do you any good in a court of law.
Escalating an unpaid invoice to legal ramifications is a last-ditch effort. The final line of defense. Pulling the rip cord. Pressing the button.
And even then, there’s no guarantee that legal help will resolve your situation, considering that, in many cases, going to court could be more expensive than the unpaid invoice.
What should I do if I haven’t paid my invoice?
Pay it. If you have an unpaid invoice, then you have something you need to take care of. Pay it.
We can’t really help you much more with this one. Well, unless you have a really good reason not to… but even then, we’re not going to weigh in. This is a Guide to Invoicing, not a court of law.
The Future of Invoicing
“…and when you get to the end, stop”
You’ve made is this far. To the grand finale of the guide. Who knew how fun invoicing could be? You even got to read quotes by rappers and writers and presidents!
At this point, it is tempting to think about what could be next. What does the future of invoicing hold? For the forceable future, printing companies like Printit4less.com are still producing much needed custom printed invoices for companies of all types and sizes.
Will we eventually send and receive all invoices from our phones—or from the chips in our heads—automatically affiliated with our social credits? Will invoices exist intertwined with thumb prints and retinal scans? Will the drone armies demand Collect Upon Delivery or will they stick to Net 30?
If there’s one thing we can be sure of, it’s that as long as people are alive, they will continue to pay one another for goods and services. Which means the invoice isn’t going anywhere anytime soon.
Long live the invoice.