The content of this article is provided for informational purposes only. You should always obtain independent business, tax, financial, and legal advice before making any business decision.
Invoices aren’t just vital records of transactions – they’re also essential for helping ensure businesses are paid on time and helping prevent any payment disputes or misunderstandings.
That said, if you’re a new business owner who’s unsure of how to create invoices, you’ve come to the right place. From branding to invoice payment terms, here’s what you need to know about what to include in an invoice.
Every invoice should include:
Here’s how businesses typically organize the elements in an invoice:
Adding your business logo, brand colors, and brand fonts to your invoice not only helps instantly reinforce a sense of professionalism and legitimacy but also helps build brand awareness among your buyers.
Prominently placing your business name, address, and contact information (email address, phone number, website) in the invoice header helps buyers know who the document is from and saves them time should they need help.
Plus, by having your buyer’s business name, contact person, contact information, and business tax ID (if applicable) upfront, you can help streamline your record-keeping.
An invoice number is a unique identifier issued to each invoice that your business issues, making them easier to track and manage.
To start assigning invoice numbers, you’ll first need to decide on a format. For example, you might use a sequential numbering system (e.g., 001, 002, 003), a date-based system (e.g., 2023-05-01), or a combination (e.g., 2023-05-01-001).
Additionally, consider assigning a prefix, such as “INV” or “IN” to your invoice numbers to distinguish them from other types of documents or transactions.
The invoice date is when you issued the invoice, which serves as a reference point for both you and your buyer when tracking the payment due date.
Provide a clear list and description of goods or services, along with their associated cost, to help ensure that you and your buyer are on the same page regarding the scope of the transaction. Your buyer can also use the invoice to account for all items and services.
Be sure to include the invoice subtotal, which represents the total amount due before adding taxes or extra charges. This subtotal is calculated by adding up the prices of all goods and services delivered.
Depending on the goods and services delivered, you may need to add line items for certain taxes, such as sales taxes or value-added taxes (VATs), as well as additional charges, such as shipping fees. Also, add line items for any discounts, such as seasonal, loyalty, or early payment discounts, that may be applied for this buyer.
From the invoice, your buyer should be able to immediately see the following:
Nobody wants to be paid late – that’s why it's important to include invoice payment terms, such as:
Although well-designed invoices are typically straightforward, it is generally a safe practice to add explanatory notes on anything unusual within the invoice.
You can also consider including any invoice terms and conditions that may be relevant, such as your return policy and how that may impact the invoice payment terms.
There are many benefits to leveraging these strategies and ensuring your buyers have all the information they need to make their payment.
Specifically, implementing invoice best practices can help businesses:
Start creating invoices for your small business now with free invoice templates.
Now that you’ve designed your invoice, it’s time to send it out.
The most common methods of sending an invoice include:
You can use specialized software to automatically generate and send invoices. As you grow your business, automated invoicing can help you save time and reduce costs. You can also use many automated invoicing platforms to help easily track your transactions, follow up about outstanding payments, and even help maintain compliance with certain payment regulations for businesses.
This involves manually creating an invoice, then sending them to your buyer through email. While this option can be faster and easier than paper invoicing, it still isn't as efficient or scalable as automated invoicing. Email invoicing leaves more room for human error, for example, since you have to manually build each invoice and send reminders to customers who haven't paid.
This is the traditional method of physically printing and mailing your invoice to buyers. Paper invoicing is much slower than email and automated invoicing, and it's more difficult to track. Physical invoices can also get lost or damaged in the mail, resulting in security risks and delayed payments for your business.
To learn more about the pros and cons of each option, check out this guide.
Ready to create your first invoice? We’ve got good news: There’s no need to build one from scratch manually. Use our free invoice generator to get started, or learn how to create an online invoice with PayPal.
Alternatively, explore these invoice templates that you can easily customize:
PayPal also offers industry-specific invoicing resources, such as for electrical contractors, construction workers, and freelancers.
By invoicing with PayPal, you can accept payments from 200+ markets across the globe and invite customers to easily use their preferred payment method — including credit and debit cards, Venmo, Apple Pay, and installments — helping you get paid faster. You can also easily customize each invoice to match your brand and communicate your unique payment terms.
The work doesn’t stop once you send your first invoice, either. Use PayPal's online invoice tracker to keep tabs on each payment status, send automatic reminders, and schedule recurring invoices — so you can continue focusing on improving cash flow and growing your business.
Get started with PayPal’s invoicing solutions.
In partnership with three expert business owners, the PayPal Bootcamp includes practical checklists and a short video loaded with tips to help take your business to the next level.
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