How to write an invoice and what to include
Getting paid for your hard work starts with sending a clear, accurate invoice.
Invoices with issues like missing information, unclear payment terms, or simple formatting mistakes can lead to delayed payment and create unnecessary back-and-forth with your customers.
Fortunately, writing an invoice is straightforward once you know what information to include.
Whether you’re a freelancer, small business owner, or growing company, we can help you understand how to write up an invoice, different types of invoices, what they contain, common payment terms and payment methods, and best practices for sending invoices professionally.
Key takeaways
- Include all essential details in an invoice, such as your business and customer information, invoice number, itemized charges, payment terms, and total amount due.
- Choose the invoice type and payment terms that best suit your business and customer relationship.
- Send invoices promptly as a PDF file with clear payment instructions to help reduce payment delays.
- Follow up on overdue invoices using a consistent process to improve your chances of getting paid on time.
Here’s what we’ll cover:
What is an invoice?
An invoice is a document that a business sends to a client or customer to request payment for products sold or services provided. It includes the total amount due and the information the customer needs to review and process the payment.
A standard invoice must show:
What should you include on a standard invoice?
Standard invoices should typically include:
- ‘Invoice’
- Your company name and contact details
- Customer’s name and address
- Invoice date
- Invoice number
- Purchase Order (PO) number (if applicable)
- Invoice due date
- Description of items sold, or services provided
- Date goods supplied
- Total amount due
- Sales tax (if applicable)
- Accepted payment methods
- Payment terms
- Notes (if needed)
Here’s a closer look at each of these elements:
1. The word ‘invoice’
Include the word “invoice” near the top of the document to differentiate it from a receipt, an order, or a quote.
2. Your company name and contact details
An invoice should include your company’s name, business address, and contact details, including phone number and email address.
This allows your customer to contact you if they have questions about the invoice or order.
3. Your customer’s name and contact details
Address the invoice to your customer and include their contact details.
Accurate customer information helps ensure the invoice reaches the correct person for processing.
4. Invoice date
The invoice date is the date the invoice was created, not when the goods or services were provided.
Payment terms are based on the invoice date, so including this helps you and your customer know when payment is due.
5. Invoice number
Each invoice should have a unique invoice number to avoid accidental duplication.
It’s best to use sequential numbering so each invoice can be accurately tracked and accounted for.
Invoice numbers can contain letters and numbers.
6. PO number (if applicable)
Your customer may use purchase orders to approve and track purchases, although not every business does.
If your customer provides a PO number, include it on the invoice. This allows them to match the invoice with the approved purchase and can help speed up the payment process.
7. Invoice due date
The invoice due date is the latest date your customer should pay. This date is based on your payment terms.
For example, if the agreed payment term is net 30 and the invoice date is July 1, the invoice due date would be July 31.
8. Description of items sold, including quantity and unit price
Include a brief but clear and meaningful description of:
- Items or services sold
- Quantity of items or services
- Price per unit
This helps your customer verify that what was ordered matches what was invoiced.
9. Date good supplied
If goods are supplied on a different date from the invoice date, include the date they were delivered to your customer.
This information is usually added alongside the relevant goods description and helps your customer identify which items are being invoiced.
10. Total amount due
In addition to the price per unit, your invoice should clearly show the total amount due for all items or services.
Displaying the total amount due makes it easy for your customer to verify the amount payable.
11. Sales tax amount (if applicable)
If your business is registered in a state with sales tax and your goods or services are taxable, you must include the appropriate sales tax on the invoice and collect it from your customer.
Five states don’t charge state sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. However, local jurisdictions (towns, cities, and counties) may still impose local sales taxes.
Sales tax requirements vary depending on where your business operates and what you’re invoicing for.
You should consult a tax professional to make sure you understand how sales tax applies to your business.
12. Accepted payment methods
Include the different ways your customer can pay the invoice.
Common payment methods include:
- Cash
- Check
- Credit card
- Bank transfer (ACH)
- Online payment (PayPal or Zelle)
- Mobile payments (Apple Pay)
- E-wallets (Venmo)
Some accounting software providers, including Sage, offer integrated payment solutions that let you add a Pay Now button to your invoices, making it easier for customers to pay.
13. Payment terms
Clearly state your payment terms on every invoice.
Although they aren’t always required, payment terms set expectations, remind customers when payment is due, and can help reduce payment delays.
14. Notes
Use the notes section for any additional information that helps clarify the transaction or next steps.
This could include:
- A thank you note
- Terms and conditions of the sale
- Return and refund procedures
If you’re only sending a few invoices each month, invoice templates can help you write up professional invoices quickly.
As your business grows, or if you’re sending more than five to ten invoices each month, finance software can help by customizing and automating invoicing, sending payment reminders, and supporting better cash flow management.
Different types of invoices
Although every invoice serves the same purpose, the type of invoice you should use depends on where you are in the transaction and how your business bills customers.
Pro forma invoice
A pro forma invoice is sent before goods are delivered or services are provided. It gives your customer an estimate of the expected costs but doesn’t request payment.
Pro forma invoices are commonly used for:
- International shipments for customs clearance
- Quotes for potential orders
- Custom orders
- Insurance coverage for valuable shipments
To avoid confusion, clearly label the document with the words “Pro forma invoice.”
Interim or progress invoice
Businesses working on long-term projects may issue interim or progress invoices at agreed-upon project milestones.
They’re commonly used for projects such as:
- Large-scale construction
- Software or technology implementations
Progress invoicing helps businesses maintain cash flow throughout a project instead of waiting until the work is complete to receive payment.
Final invoice
A final invoice is issued once a project or transaction has been completed. It’s most commonly used after interim or progress invoices.
The final invoice summarizes previous interim invoices and shows any remaining balance due.
Credit memo
A credit memo (or credit invoice) reduces the amount originally billed to a customer.
You might issue a credit memo when:
- A customer was overcharged
- Goods arrive damaged or defective
- Incorrect items were supplied
The credit memo allows the customer to offset the original invoice.
Debit memo
Unlike a credit memo, a debit memo increases the amount originally billed.
Businesses may issue a debit memo to cover:
- Interest or late late payment fees
- Additional freight or shipping charges (not on the original invoice)
- Variable cost adjustments based on usage or consumption
Recurring invoice
Recurring invoices bill the same customer for the same amount at regular intervals.
They’re commonly used for:
- Subscription services
- Retainers
- Membership fees
- Software licenses
- Accounting services
Many cloud-based invoicing solutions can automate recurring invoices, send them automatically, and issue payment reminders if they become overdue.
Past due invoice
A past due invoice is sent when a customer has missed the payment deadline on the original invoice.
Include the words “Past Due Invoice” near the top of the document.
You may also include any applicable late payment charges instead of issuing a separate debit memo.
Note that a past due invoice is different from an outstanding invoice. An outstanding invoice is unpaid but not yet overdue, while a past due invoice remains unpaid after its due date.
Electronic invoicing
Sending invoices electronically can speed up your collections process by avoiding delays from mailing a physical invoice.
Invoices arrive immediately at your client’s inbox and can be accessed from anywhere.
Electronic invoices may lead to receiving payments faster and improving your cash flow.
Example invoices
Although every invoice should include the same core information, the layout and level of detail can vary depending on what you’re billing.
These examples show how different businesses present the required information while keeping invoices clear and easy to process.
Service-based LLC
This example focuses on professional services rather than physical products, using service descriptions and a simple billing summary.
Goods-based LLC
This invoice includes itemized products, quantities, unit prices, sales tax, and shipping information, details commonly needed when billing for physical goods.
Service-based small business
This example uses a streamlined layout that still includes the essential invoice information while keeping billing simple for service-based businesses.
What are the most common invoice payment terms?
Some of the most common invoice payment terms include due upon receipt, net payment terms—including net 15, net 30, net 45—2/10 net 30, and Cash on Delivery.
When writing an invoice, use clear, easy-to-understand payment terms to help avoid misunderstandings with your customers.
Always include the invoice due date so your customer knows exactly when payment is expected.
Due upon receipt
When an invoice is due upon receipt, your customer is expected to pay as soon as they receive it—typically by the next business day.
This payment term can help improve cash flow and reduce the risk of late payments.
It’s commonly used for:
- One-time services
- New customers without an established payment history
- Custom or specialty orders
- High-risk transactions
Net payments
Net payment terms give customers a set number of days to pay from the invoice date.
For example, with net 30, payment is due 30 days after the invoice date. If the invoice is dated July 1, payment would be due on July 31.
Common net payment terms include:
- Net 15: payment is due within 15 days.
- Net 30: payment is due within 30 days.
- Net 45: payment is due within 45 days.
- Net 60: payment is due within 60 days.
While longer payment terms may appeal to some customers, net 60 can delay cash flow and affect your ability to cover day-to-day business expenses.
2/10, Net 30
With 2/10 net 30 terms, your customer receives a 2% discount if they pay within 10 days. Otherwise, the full invoice amount is due within 30 days.
Similar payment terms include:
- 1/15 Net 30: 1% discount if payment is made within 15 days.
- 1/10 Net 30: 1% discount if payment is made within 10 days.
Cash on Delivery (COD)
Cash on delivery means your customer pays for the goods when they’re delivered rather than before they’re shipped.
What are the most common invoice payment methods?
Common invoice payment methods include credit and debit cards, checks, Automated Clearing House, wire transfers, Zelle, PayPay, and direct debits.
When writing an invoice, choose payment methods that are convenient for both your business and your customers.
The payment options you offer can affect how quickly you get paid, so it’s worth including the methods that best suit your business.
Credit or debit card
To accept credit or debit card payments, you’ll need a merchant account and either a card reader (for in-person payments) or a payment gateway (for online payments).
The cost of accepting card payments varies depending on transaction volume and card type, but you can generally expect to pay between 2% and 3% of the transaction amount.
Card payments are processed quickly, and you’ll usually receive the funds in your business account within one to three business days.
Check
Checks are slower than most electronic payment methods and carry the risk of being delayed in the mail or returned because of insufficient funds.
These factors can delay payment and affect your cash flow.
Banks typically don’t charge a fee to deposit checks.
Automated Clearing House (ACH)
ACH is an electronic bank-to-bank payment processed through the Automated Clearing House network.
It’s well suited to larger or recurring payments where cash isn’t practical.
ACH payments are typically free to receive and usually arrive in your bank account within one or two business days after your customer initiates payment.
Wire transfer
Like ACH payments, wire transfers move money electronically between banks.
However, wire transfers are generally faster because they don’t pass through the Automated Clearing House network.
Funds are often received the same day, with transfer fees typically ranging from $0 to $25.
Zelle or PayPal
Zelle and PayPal offer fast, convenient alternatives to cash and checks.
Zelle is available through most major US banks and allows customers to send money directly from their bank accounts, often within minutes.
PayPal can be a convenient option when receiving payments from customers outside the United States.
Direct debit
Direct debit is commonly used for subscription services and other recurring payments because it allows businesses to collect payments automatically on an agreed schedule.
Your customer must authorize the direct debit, typically by completing a direct debit authorization form with their bank.
Once it’s set up, payments are collected automatically, helping businesses receive regular payments while reducing manual work.
What’s the best way to send an invoice?
You should send your invoice as soon as possible after completing the work or delivering the goods. Emailing it as a PDF attachment that can’t be edited or using automated invoicing software is quicker and easier than issuing paper invoices by post.
Prompt invoicing helps maintain healthy cash flow and can reduce delays in receiving payment.
Depending on your business, that might mean sending invoices daily, weekly, or monthly.
- Goods-based businesses: send invoices when the items ship, unless payment was collected in advance using a pro forma invoice.
- Service-based businesses: send invoices at the end of a project or according to the billing schedule agreed upon with your customer.
Because people can easily edit Word and Excel files, it’s best to send invoices as a PDF.
How to write an invoice email
If you’re writing an invoice email, keep the subject line clear by including your company name, invoice number, or billing period. The email itself should be concise, explain what the invoice is for, and include the invoice as a PDF attachment.
You should also make sure it has the phone number and email address of the person responsible for payments at your customer’s business.
This makes it easier to follow up on overdue invoices, and you can copy them when sending the invoice.
If your business operates as a sole proprietorship or partnership, you should send a completed Form W-9, Request for Taxpayer Identification Number and Certification, with your first invoice.
Your customer may need this information for tax reporting purposes. Providing it with your initial invoice demonstrates that your business is organized and prepared.
How do you make sure invoices are paid on time?
To maximize the chances of your invoices being paid on time, make sure you use clear, pre-agreed terms and conditions, apply PO numbers where relevant, offer as many convenient payment methods as possible, and use an effective system or software solution to track and follow up on invoices.
Here’s a more detailed breakdown of proactive steps to consider when writing an invoice and following up on it, that can help reduce late payments and improve your cash flow:
- Use clear terms and conditions.
- Agree on payment terms before work begins.
- Request a PO number when applicable.
- Ask new customers to pay their first invoice in advance.
- For large or long-term projects, request milestone payments.
- Offer payment methods that are convenient for your customer.
- Monitor outstanding invoices and follow up promptly when payment due dates pass.
If you do need to follow up on an overdue invoice, follow these steps:
1. Verify that the invoice is unpaid
Before contacting your customer, confirm that payment hasn’t already been received or applied to another customer account.
2. Send a friendly reminder
Call or email your customer with a polite reminder and resend the original invoice if needed.
3. Send a formal reminder
If the friendly reminder doesn’t resolve the issue, send a formal reminder by email or mail.
Use a professional tone, and clearly state the overdue balance, including any applicable late payment fees.
4. Offer a payment plan
Consider offering a payment arrangement if your customer is experiencing financial difficulties.
5. Escalate the matter
If payment is still outstanding, send a final notice explaining the next steps, which may include referring the debt to a collection agency.
Following up on overdue invoices isn’t aggressive—it’s good business practice.
Staying on top of your invoicing demonstrates professionalism and reinforces the importance of paying on time.
Automated billing software can help speed up your collections process by sending invoices electronically, reducing delays associated with paper invoices, and making it easier to track payments and follow up automatically.
FAQs about invoices
An invoice is a request for payment issued before a customer pays for goods or services. A receipt, on the other hand, confirms that payment has already been received. Together, they document different stages of the same transaction.
Invoice templates can be a good option if you only send a few invoices each month. As your business grows, accounting software becomes a better choice, as it can help automate recurring invoices, track payments, send payment reminders, and streamline other financial tasks, saving you time and reducing manual work.
Yes. A pro forma invoice is issued before goods are delivered or services are completed to outline the expected costs of a transaction. Unlike a standard invoice, it provides an estimate rather than requesting payment for completed work.
Editor’s note: This article was verified by an active US-based Certified Public Accountant (CPA).
