What is invoicing

Invoicing is the process of sending invoices to clients to ask for payments for goods and services that you’ve delivered. 

The invoice shows all the details of the sale, as well as how you want the client to pay you, and when to pay you by. The payment deadline is also called the due date.

You’ve probably received many invoices yourself over the years!

Understanding invoicing

Unless your client pays in cash or with a card at the time of purchase, you have to send them an invoice to get paid for your work. This type of payment is called deferred payment—the client receives the goods or services first, and then they pay. This is very common for B2B sales—and it is the way that most companies prefer to pay their suppliers.

This type of payment system is based on trust. You risk that clients either don’t want to, or can’t pay you. Worst case scenario they go bankrupt.

However, most people do want to settle their debts. If you’re worried about not getting paid, you can always look into invoice sales or factoring.

Note that you can also invoice in advance, for services such as phone plans or TV subscriptions. This is called an advance payment.

How to make an invoice

There are many ways to make an invoice: invoice pads, invoice templates, invoice generators, and so on. However, you have to check the requirements in your country before you choose a solution.

Generally, the best way to make an invoice is to use invoicing software. Invoicing software is made to speed up your invoicing and ensure that you send professional invoices to your clients. 

The invoice has to include: 

• The date the invoice was created
• A unique invoice number
• The name and contact information of your business
• The name and contact information of the client
• A detailed description of the products or services, the quantity and unit price
• When and where the products or services were delivered
• The total amount due
• The due date
• Instructions for how you want the client to pay you, for example via bank transfer. This is called payment terms.
• Consumption tax, such as VAT or GST, if applicable
• Discounts, if applicable