What is an Invoice?
An invoice is a form requesting payment for a list of services or goods.
It's issued by the seller or service provider to the purchaser. An invoice describes the goods or services sold or hours worked. It also details the terms of payment.
Most invoices should also include the seller's address and contact information, along with some other basic information.
Why is an Invoice Called an Invoice?
If you're a word geek, you might be interested to know that the word invoice comes from the 16th century French word "envoi" which means to "dispatch or send goods", similar to the word "envoy" meaning messenger.
Sales Invoice vs Purchase Invoice
A sales invoice and a purchase invoice are two different names for the same form. From the seller's perspective an invoice is a sales invoice, while a buyer will call that same form a purchase invoice.
How to Create an Invoice
An invoice should contain these elements. SmartDraw has templates you can customize or you can make your own from scratch.
- The word "Invoice"
- An invoice number: a unique reference number
- The date of the invoice and the date that goods were sold or services rendered
- If the invoice is for work completed over a specific billing period, include the date ranges in question
- The seller's contact information: logo, company name, address, phone number
- Tax and company registration/business number of the seller
- The name and contact details of the buyer
- Description of the goods or services rendered
- Unit price of the products ordered, if applicable
- If applicable, it can also include shipping method and shipping charges
- Taxes, VAT and other fees
- Discounts, if any
- Total amount due
- Due date for payment: this can be expressed as X number of days from receipt of invoice, often 30 days
Three Tips for Creating Invoices
- Your invoice number is just an arbitrary number used to reference the invoice. You should create your own system to make sure you don't create duplicates. This also makes it easier to track the invoice when needed. Some recommend using a two- or three-letter abbreviation that represents your client or buyer followed by a four- to six-digit number. Some contractors use the date an invoice is submitted as the invoice number. For example, if your buyer was the BBC and you submitted your invoice March 14, 2015, your invoice number could be BBC-150314. Some will simply make the invoice numbers sequential.
- If your invoice includes goods or services delivered on different dates, include when each service was completed, the hourly rate or unit price charged, and the total amount owed for each.
- Before submitting an invoice, check with the buyer to see if they prefer invoices in a specific format with specific information to avoid any delays in processing payment.
The best way to understand invoices is to look at some examples of invoices.
Click on any of these invoices included in SmartDraw and edit them:
Browse SmartDraw's entire collection of invoice examples and templates