What Is an Invoice and How to Send It Like a Pro

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Does the prospect of invoicing confuse or frustrate you? You’re not alone. This is one of the most common issues for many new business owners. But you don’t need to worry, because, with the help of this short guide, you’ll know exactly what an invoice is and how to send it like a pro.

Basic Definition of an Invoice

First, let’s look at what an invoice is and does. In simple terms, it is a document listing items provided or work done, as well as their cost. It specifies what a buyer must pay a seller once they have received the items or services.

Knowing how to send an invoice is a crucial step in learning how to manage your business. But even more importantly, you must know the difference between sales and purchase invoices.

What is a Sales Invoice?

A good grasp of marketing helps entrepreneurs maximize a business’s potential. But in a sales-oriented business, understanding how invoicing works is even more crucial. So, what is a sales invoice?

You will generate and issue a sales invoice to request payment from a customer. The invoice must list the items sold, or services supplied, along with their respective quantities and rates. It should also include the transaction date and payment terms.

Your sales invoices confirm the completion of your sales orders and record your accounts receivable. They allow you to track your business’s cash inflow and revenue.

Indeed, a sales invoice serves multiple functions. It establishes a legal contract between you as the seller and your customer as the buyer. It requests payment from the buyer. It also forms part of your financial records, useful for tracking income and expenses.

Sales invoices verify transactions and ensure compliance, and are thus useful in an audit. If you’re considering private equity for enhancing your business growth, you’ll need clear and accurate financial records.

What is a Purchase Invoice?

One of the biggest myths about starting a small business is that you have to be an expert to succeed. But this is simply not true. However, you will need a savvy business plan and venture capital. And you’ll need to know when and why to issue a purchase invoice.

A purchase invoice confirms the goods or services purchased by your business and records the amount owed to your supplier. Your purchase invoices therefore record your accounts payable and allow you to track your business’s cash outflow and expenses.

Your purchase invoice should be generated after your purchase order is delivered, listing the cost of the products or the services. The purchase invoice should have two dates — the order’s delivery date, and the due date (which is then you will have to pay the supplier).

Purchase invoices allow your business to track its purchases and expenses and thus form part of your financial records. They can also be used to track tax compliance or to resolve disputes with your suppliers.

Creating an Invoice

Sales Invoices

A supplier sends, and a purchaser receives a sales invoice. A sales invoice typically includes:

• The invoice date
• An invoice number
• An itemized list of products sold and/or services rendered
• Total price of items or services sold
• Applicable sales tax
• Any offered discounts
• Terms and conditions for payment
• Supplier branding — the business’s name and logo, contact information, and signature
• The customer’s name and contact details

Sequential invoice numbers make keeping financial records and doing your taxes a breeze.

Purchase Invoices

A purchaser sends, and a supplier receives a purchase invoice. A purchase invoice typically includes:

• The invoice date (the day the order is delivered)
• An invoice number
• An itemized list of goods or services received
• The total price of the items or services purchased
• The total cost of the items, including applicable taxes and any offered discounts
• Payment terms and conditions
• Contact information of both the seller and the buyer

The unique invoice numbering system makes cross-checking information quick and simple and prevents accidental payment duplication.

Sending an Invoice

Invoices offer accurate transaction information that can be referenced at a later date. But it’s a good practice to always check all information on an invoice before sending it. So, how do you send an invoice?

You can:

• Print it out and give it to the other party
• Post it via physical mail
• Add it as an attachment in an email, with a message stating that the invoice for XYZ (give some basic details) has been attached.
• Use professional invoicing software

In the digital age, most businesses are embracing technology to create and send invoices. Professional invoicing software streamlines the entire process. It allows you to create and send invoices via email directly from the invoicing platform. You can also use it to track any overdue payments.

Most businesses today utilize technology to streamline their invoicing processes, making tasks like creating and sending invoices more efficient. For anyone still manually managing invoicing, switching to a digital system can save time and effort. Utilize an invoice generator tool by Invoice Simple to automatically generate professional invoices online, ensuring accuracy in every transaction while meeting business demands instantly.

This ensures greater accuracy of your financial records and lightens the admin burden, so you can focus on building a business to be proud of.