When you first start a business, it’s easy to underestimate the significance of invoicing.
It’s not just a basic administrative task – it influences the way your business earns money, so it’s vital you set up a good invoicing system that works for both you and your clients.
At the same time, invoicing should be efficient. Business owners are often short on time, so using small business invoice templates help to get invoices written up and sent so you can focus on all your other priorities.
Using an invoice template helps to make invoicing quicker. Templates should make all the important information clear for customers to see what the invoice is for, how much they owe and when they should pay it.
Use online invoice invoicing tools such as Xero or MYOB to make it easier and increase the chances of having customers pay invoices promptly.
The etiquette of raising an invoice
Before you even start generating an invoice, make sure your customer is expecting one. This is a vital step that’s easy to miss, but if customers receive an invoice out of the blue, they’re much more likely to ignore it.
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When you start doing business with customers, explain when you’ll send invoices. You can even show them what your invoice will look like, so they have a much better chance of understanding them and paying them on time.
What is a small business invoice used for?
A small business invoice is how you get paid. It details the work you’ve done for a client, the cost and when it’s due.
If it’s for a one-off client, then it pays to send the invoice soon after you’ve completed the work. If it’s for a regular client, or one you’re working with on a long term project, then you can send invoices at the same time of the month, every month.
Regular invoicing is important for your own business cash flow, to keep money coming in. It also creates predictability with your clients. If they know when you’ll be invoicing them, they can make sure they have the cash on hand to pay you when the invoice is due.
Anatomy of an invoice
All good invoices need to have a few key details on them. When using a small business invoice template, look to make the most important details clear and obvious, to eliminate any possible confusion.
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It should have:
- The invoice title – simply the word ‘Invoice’ at the top
- Your business name and/or logo
- Your address and contact details
- The invoice date and the due date
- The invoice number
- Your GST number (if applicable)
- The customer’s name
- Itemised details of the work provided
- The quantity of each type of work, and the rate charged
- The total before GST
- The total amount payable
- Payment terms and details
You can also include a small business receipt template at the bottom if you like – this can help customers who want to complete notice of having paid the invoice for either their own records, or to send back to you.
Invoice details – how much do you need to put in?
The basic idea of an invoice is it should have all the information your customer needs, but not so much so the important details aren’t lost.
They should be able to open your invoice and immediately know who it’s from, what it’s for, and what they need to do with it.
With that in mind, the most critical pieces of information are your business’ name, the work done, the amount due, the due date and payment instructions.
If you’re looking at sample invoices for small businesses, you’ll see they’re all one page long. This is the standard – it’s enough to fit in everything important, but not too much to become cramped and crowded.
Steps to follow when preparing an invoice
Start by opening your small business invoice template, then customise it with the following details:
- The date.
- The invoice number.
- Customer information – the business name, the contact person, their address and reference number (if applicable).
- An itemised description of the goods/services you provided.
- The total costs (double check your sums to be sure).
- Add your payment terms, including any specific terms this customer has.
- If the invoice needs to be approved, send it to whoever does that for you.
- Save a copy of the invoice for your own records. This protects you in case fraudsters get your invoice and make an altered version.
- Send the invoice to your customer.
It’ll also help to avoid these common invoicing mistakes.
At the end, your invoice should be completely unique for the client and the relevant period of work.
You can also look to use online invoicing software, which makes invoicing much faster. Tools such as Xero and MYOB have their own invoice templates for small businesses, and populate them with your own information.
Small business invoice template
Template infographic to be designed based on this link: https://www.waveapps.com/invoice-templates/small-business
A good invoicing system may not seem like a priority when you’re starting a new business, but it can save you a lot of time and energy.
The majority of startups and small businesses today use online invoicing software. It helps to automate processes and send standardised invoices that customers can read and understand at a glance.
Not only that, but they can come with pay now options to improve the chances of prompt payment, and reduce the need to follow up with late-paying clients.
For more information, and other ways to boost the cash going through your business, check out this guide to improving small business cash flow.
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