How to make an invoice?

The term invoice means the buyer owes money to the seller after a transaction of products or services. When the purchase is made, the seller delivers the product or services and the buyer now owes money to the seller.

It is also a document that describes what kind of products or services the seller has provided to the buyer. Invoice has quantities and prices for each product or service related to a business transaction between a buyer and a seller. If there are any taxes or discounts, they must be stated in the invoice as well.

Making an invoice with pen and paper Photo by Helloquence on Unsplash

What document must contain to be an invoice?

An invoice is a document that describes how much money does the buyer owe and what was included in the purchase.

  • Date of the invoice - The date when the invoice was created
  • Buyer - Company name and contact details
  • Seller - Company name and contact details
  • Tax details - (i.e. VAT number for businesses in EU)
  • Payment terms - When the invoice must be paid, charges for late payment, payment method, the bank account of the seller
  • Total amount to be charged and the currency
  • Unique invoice number
  • List of products with price, quantity, and taxes
  • Other information to help process the invoice (purchase order, bank transaction reference code for identifying the buyer)

Delivery of the invoice

The seller makes the invoice and then sends it either via email or via postal services. It is also perfectly fine to deliver it in person. Once the invoice is delivered, then the seller will wait for the payment.

Late payments

If the buyer does not make payment in the expected time, a reminder email must be sent as soon as possible. If the email does not have any effect, pick up the phone and call the company and inform about the late payment for an invoice.

If the buyer refuses to make the payment, there are few possibilities, and of course, it is always a good idea to talk to a lawyer.

  • Keep reminding the buyer and hope they will pay the invoice
  • Sell the invoice to a debt collection service, when you sell the invoice, you will get less money back, but you don’t have to worry about it anymore.

What are the tools for making an invoice?

  • Spreadsheets Microsoft Excel, Apple Numbers, LibreOffice or Google
  • Spreadsheet, they all are perfectly fine for making an invoice
  • Word processors Microsoft Word, Apple Pages, Google Writer, LibreOffice
  • Pen and paper This is the way business created invoices for hundreds and hundreds of years, and it is still a valid way to create an invoice.
  • Plain email You can write the invoice as plain text on an email, just make sure it has all the necessary information
  • Invoicing tools like Tinyinvoice

Template for an email that can be sent as plain text

This is how it looks at the email client.

This is the same email that you can copy&paste into your email client.

INVOICE

Date: DD-MM-YYYY Invoice number: 2321 Invoice total: $59.80
Fresh Vegetables Ltd Farmroad 2 323 Megacity 1 Email: [email protected] Phone number: 555-1234 Business ID: 34930233-23

BILLED TO: Example Company Ltd 123 Road Calisota (Mr. Bob Smith)
ITEMS: A bag of apples (1kg), $8.90 per bag, 3 bags, $27.70 Oranges 3kg, $19.90, 1 bag, $19.90
Subtotal: $47.60 Taxes: $12.20 Total: $59.80
PAYMENT DETAILS: Bank account 12345-123345 Bank reference code: 1233323449 Due date: January 7, 2020
A monthly interest rate of 1.5% will be applied for late payments.