Top 8 Things Every Invoice Should Have

Whether you are a self-employed solopreneur, have a side hustle or a successful business, being able to invoice and collect on sales or goods or services is the key to staying alive. Invoicing on time and ensuring timely collections will make sure the business is viable and has cash inflows.

When first starting out, it's very easy to just start a Word document and pick an invoice template and off on your merry you go.

To ensure that you don't have an administrative nightmare further down the road, either at tax time, or heaven forbid you get audited or a customer/client asks you for financial records from the past it is important that invoices are created and maintained consistently.

There are a few standard items that an invoice must have and while they seem obvious, it's quite staggering how many invoices do not have all the facets below.

Here are top 8 things every invoice should have:

1. Official Company name or Taxable Entity

   • In the case of a self-employed, but not incorporated entity, the name of the individual is required

2. Contact Information

   • In case there is a question or dispute, contact information of the person who can resolve the issues would be a nice to have on the invoice for efficiency. Some customers/clients may have others who do not have the relationship with you processing the invoice for payment

3. Invoice Number

   • This is the area of most creativity for those who do not use a software system to generate. In my many years as an auditor, I have seen almost all combinations. Just remember - KEEP IT SIMPLE! Chronological is the simplest way and if any number in the sequence is missing, right away you can spot the problem!

4. Invoice Date

   • This can seem an arbitrary date and I've seen people use the date the customer/client first ordered the service/good to the pick update date or end date a service was rendered. From a record-keeping perspective, it doesn't really matter so long as you are consistent. The invoice date does have an implication for year-end accounting or tax purposes, but for issuing, so long as you're consistent, you are winning!

   • The invoice date IS important for determining when the invoice and payment for it is due to you and your business, so decide on which date to use as an invoice date while considering what terms (see below) you request from your customer/client

   • The invoice date is used to calculate how many days overdue an invoice is.

5. Payment Term

   • This is the policy you use for your customers/clients and depending on your relationship with them or their credit history, you may request payment:

     • Due on Receipt (of the invoice), Net 5, 10, 15, 30 - meaning they have so many days to pay after the invoice date.

   • If there are no payment terms, then you are giving control to the recipient on when to pay you.

6. Address or Banking details

   • How you would like to receive payment is an efficient way to ensure you get payment. As we move towards more electronic means of payment, it's always good to either say that you accept electronics funds and how.

   • I've seen invoices which dictate a password for e-transfers of funds and I've seen banking details directly on invoices for direct deposit and wires.

   • If you still prefer cheques, please ensure the customer/client knows where to mail the cheques. If you're still using cheques, contact me and I'll show you how to move to electronic payments!

7. Information on what was purchased

   • What is being sold will dictate what information and how much information goes on the invoice. It can be a combination of quantity and cost per unit or description of the unit/part with SKU # or description of the service provided.

8. Tax information

   • In Canada, if your business is subject to GST [See great post on more info => http://www.personaltaxadvisors.ca/do-i-really-have-to/], then the GST # is required on the invoice. This allows the recipient to claim the GST paid on your invoice as an 'Input Tax Credit'. Customers/clients have the right to ask for an invoice to be amended if the GST # is not evident on the invoice if you are a GST registrant.

Bonus Addition: a 'Thank you for purchasing' is always a nice touch!

Many solopreneurs tell me, they don't have time to learn how to use an app to do record keeping, or don't have a big enough client base of business to use software, but with Quickbooks Self Employed or Quickbooks Online, administrative tasks become less time-intensive because the standard required information is already pre-set so consistency is insured every time. Reducing admin time will free up the solepreneur to focus on the business or skill they are trying to promote and sell!

Contact me for a free consultation session on how Quickbooks Online can free up your time to focus on what you want to do and not what you have to!