How to Create an Invoice: A Step-by-Step Guide

If you’re a small business owner, freelancer, or contractor, knowing how to create a professional invoice is crucial for getting paid on time. A clear, well-structured invoice will help you build trust with your clients and keep your finances organized. Here’s exactly how to make an invoice so you can bill your clients with confidence.

What Is an Invoice?

An invoice is a formal business document that you send to your clients to request payments. It outlines the goods or services you’ve provided, how much your customer owes, and when the payment is due, along with some other important details.

You create invoices for several reasons, including:

•   To request payment for goods or services

•   To provide details on those goods or services

•   To define the terms of payment, such as when payments are due

•   To establish a written account of the transaction

Along with ensuring you get paid on time, invoices are helpful for managing your cash flow and keeping financial records. If you ever run into a dispute with a client, you can refer back to your invoice for documentation of the transaction.

What to Include on an Invoice

There are several pieces of important information to include on each and every invoice you send. Your invoices should contain:

•   The word “invoice”: Make sure it’s labeled with the word “invoice” so a client can immediately identify the document.

•   Invoice number: Each invoice should have its own unique number so you or your client have the option of referencing it in the future.

•   Invoice date: Include the date that you created and sent the invoice.

•   Business information: This includes your name or business name, address, email, and phone number. If you have a logo, you could add it to customize your invoices.

•   Client details: You should include the name of the client or business, along with their contact details. Your client might give you instructions on what to include.

•   Description of goods or services: Break down your products or services in an itemized list with details about each one.

•   Unit rates and quantities: Include the quantity and rate for each good or service. This might be a set cost or hourly rate.

•   Total amount due: Clearly display the subtotal, along with the final total after any taxes or discounts.

•   Payment terms and due date: Make sure to indicate the due date for payment, along with any instructions about payment methods the client might need.

•   Notes or extra terms: If you have any special instructions or a return policy, you can add that to your invoice as well. You might also include a thank you note to your client.

How to Make an Invoice

Creating an invoice is simpler than you may think. Here’s how to make an invoice, step by step.

Step 1: Choose an Invoice Template or Tool

As for how to create invoices, you have two main options: you can make your own for free or use an invoicing platform to create invoices and track payments.

•   Free invoice templates: You can find free invoice templates on sites like Google Docs and Canva. It’s easy to customize them to your business and may fit your needs when you’re just starting out. Once you’ve designed your invoice, you can download it as a PDF and email it to your clients.

•   Online invoicing tools: If you’re sending invoices regularly, you may opt for a platform like FreshBooks, QuickBooks, or Wave. These tools help you generate invoices quickly, send them directly to clients, and track your payments, along with other features. If the platform you choose processes payments, your clients can pay directly from the invoice.

Step 2: Add Your Business and Client Details

Your business and client details should appear at the top of your invoice. You’ll want to include your name or business name, address, email, and phone number.

For your client, include their name, company name, email, and billing address. Find out if your client wants you to address the invoice to a specific contact person or department.

Step 3: Itemize Products or Services

Here’s where you’ll list out the products or services you provided. This part is highly important, as it explains what you’re charging for.

You might use a table or list with clear line items. Make sure to include:

•   Description of goods or services

•   Quantity of each, whether number of products, length of project, or how many hours you worked

•   Rate, which might be per-item or hourly

•   Total for each line (quantity x rate)

At the end of your list, include a subtotal and the total amount due. The total amount may differ from the subtotal due to taxes or discounts.

Having everything listed as clearly as possible will eliminate confusion and help your client understand exactly what you’re billing them for.

Step 4: Include Payment Terms and Due Date

Your payment terms and due date will clarify when and how you’ll get paid. Some common payment terms include:

•   Net 15: Payment is due within 15 days

•   Net 30: Payment is due within 30 days

•   Due on receipt: You expect payment right away when the client receives your invoice

Your client might also have payment terms that you agreed to at the beginning of your contract, so double check any details from their side. Make sure to include the specific date your payment is due by.

You may also want to include the payment methods you accept, such as bank transfer, PayPal, or credit card. If you have any additional policies around payments, such as a return policy or late payment fees, write that on your invoice as well.

Some business owners rely on small business financing, like a business line of credit, equipment financing, or invoice financing, to manage gaps between invoicing and receiving payments.

Step 5: Review, Send, and Track Your Invoice

Before you send your invoice, double check everything for accuracy. Make sure there are no typos, incorrect amounts, or missing client details. Confirm that you put a unique invoice number for each invoice you send.

When you’re ready to send it, you might send a PDF via email or send your invoice through your invoicing platform to the appropriate contact person. Track your invoice after you’ve sent it and record whether payment is pending, paid in full, or overdue.

You might want to set reminders to follow up with a client when the payment due date is approaching or has been missed. If you’re using an invoicing or small business accounting tool, you can often automate reminders to your clients and yourself.

Invoice Best Practices

These best practices can help you reduce payment delays and calculate your cash flow more accurately.

•   Number your invoices sequentially: For example, you might number your invoices 001, 002, 003, and so on. A simple numbering system will help you stay organized and make tracking invoices easier for both you and your client.

•   Set clear payment terms from the get-go: Make sure you and your client have discussed and agreed upon payment terms before you started work. This will help prevent any disagreements after you send your invoice.

•   Offer more than one payment option: Make it easy for your client to pay you by offering multiple payment options, such as ACH transfer, credit card, and PayPal. If possible, consider embedding a digital payment link on your invoice.

•   Be consistent with formatting: Use the same layout to look professional and keep things simple. If you have a business logo, you can include it for memorable branding.

•   Enter any client-specific notes: Some clients may ask for specific details, such as purchase order (PO) numbers. Confirm that you’ve included everything the client needs on their end to process payments.

•   Send invoices promptly: Don’t wait too long to send your invoice after you’ve completed your work. Depending on the client, you might send it on a certain date each month, by the end of the month, or immediately after you’ve delivered your work.

•   Store copies of your invoices: Keep records of all your invoices for financial tracking and tax purposes. If you’re using an invoicing platform, it may automatically offer a centralized dashboard with all your invoices, including their status (e.g., sent, viewed, due, or paid).

The Takeaway

Invoicing is an essential part of managing your business as a freelancer, contractor, or small business owner. You use invoices to bill your clients, track your payments, and keep your finances in order.

If you’re looking to create invoices for free, you can find templates online and customize them to your needs. Alternatively, you may use an invoicing service that can automate the process, accept payments, or integrate with accounting software.

By including all the essential information and following a few best practices, you can create clear, professional invoices to send to your clients and get paid on time.

Ready to grow your business? SoFi Small Business Loans can give you fast access to the capital you need. Check your eligibility in minutes.

With SoFi Small Business Loans, it's fast and easy to get the financing your business needs to thrive.

FAQ

What is the difference between an invoice and a receipt?

An invoice is a formal business document that you send to a client to request payment for goods or services. A receipt provides proof that the client has paid.

How do I number my invoices?

Part of knowing how to create an invoice is knowing how to number them. You’ll want to use a unique number for each invoice you make. You might number them sequentially (e.g., 001, 002, 003) to keep things simple. Another option is using dates or, if applicable, specific client codes. Try to use a consistent system to keep things clear for yourself and your clients.

What payment terms should I include on an invoice?

Include how long the client has to pay your invoice, such as net 15, net 30, or due on receipt. You can also include payment methods the client can use, such as a credit card or bank transfer. Finally, indicate the specific due date for your payment, along with any additional policies you have around late payments or returns.

Can I create an invoice for free?

Yes, you can create an invoice for free in a document or spreadsheet or find free templates on a site like Google Docs or Canva. To keep your formatting intact, it’s generally a good idea to save your invoice as a PDF before sending it to your client.

What should I do if a client doesn’t pay an invoice?

If a client doesn’t pay an invoice, your first step is to send a casual, friendly follow-up email with your original invoice attached. If they continue to not pay it, you’ll want to send additional reminders about the outstanding payment. After 30 or 60 days, try to call or schedule a meeting with the client to find out what the issue is or if they need a payment plan. If 90 days have passed, it’s time to send a formal debt collection letter by certified mail. Your last resort could be going to small claims court or hiring a collections agency to recoup the debt.

---

Photo credit: iStock/IRA_EVVA

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOSMB-Q226-133