How To Create An Invoice

How To Create An Invoice

Whether creating an invoice manually or if you're using technology, be sure to follow these best practices to get paid accurately, and on time.

How To Create An Invoice

How to Create an Invoice

Make Sure You Get Paid The Right Amount and On Time

Success is a two-way street. You might produce the best products or consistently deliver competition-beating services, but your organization can't thrive without a straightforward system for getting paid. With the right invoicing software and possibly an external partner that offers invoicing support, you can better track sales and ensure that for all the hard work going out, you have money coming in. 

However getting paid isn’t the only aspect to consider. Think about your ideal customer experience and compare it to what your clients have to go through to remit payments. The more difficult it is to pay you, the more likely you will invite delays, decrease customer satisfaction, and inevitably run into a retention issue. Making it easy for your client is just as important as making it easy for your business. 

When considering how to approach invoices, there is a lot to consider. Invoicing software options are not all created equal, so you need to know how to create an invoice that works for you and your business.    

Table of Contents:

  • What should you include on an invoice?
  • How can you create a simple invoice?
  • What are the drawbacks of free invoice templates?
  • What is invoicing software?
  • Key invoicing solutions vetted by Decimals Solutions Team

What Should You Include On An Invoice?

An invoice is a legally binding, non-negotiable document requesting payment for the goods and/or services you delivered. It's how you record a sale and ask to be paid. So, it should include information about the seller, the buyer, what was sold, a breakdown of the associated costs, and any relevant dates.

When writing an invoice, make sure to include:

  • Your name or company name
  • Your contact information
  • Customer’s company name and address
  • Date you provided the goods or services
  • Date you created the invoice
  • Cost breakdowns, including prices, hours, or quantities of the goods and services
  • Subtotal of net costs
  • Applicable discounts
  • Applicable taxes
  • Total amount owed
  • Payment due date
  • Payment method

Depending on the circumstances, you might want to include a comments section with specific requests or requirements. For example, you can include information about late fees. To help with tracking, both for you and your customer, you should also include an invoice number.

How Can You Create A Simple Invoice?

Now that you know what it is and what to include, you're ready to create a simple invoice. Back when bookkeeping meant literally working with giant stacks of paper books, everything had to be written out and then snail-mailed.

Thankfully, you now have options, including using a free Excel Microsoft invoice template.

Create an Invoice in Excel From Scratch

Because it comes with a few templates, creating an invoice in Excel isn't too hard. And it's not actually "from scratch." Most of the steps are already done for you, but there's still setup that you will need to take care of..

First, open up the program and use the search bar to find the invoice templates. There are different invoices for different types of companies, including sales, service, and shipping, so make sure to pick the right one.

Second, customize the invoice template. Start by adding in all the foundational information that will be the same for all your invoices. For example, add the company logo and business contact information, such as the name, address, phone number, and email address. Saving a copy of the template at this step saves you from having to fill out everything again for future invoices. Make sure to name the file, so it's clear it's your organization's new invoice template.

You can now start editing the invoice and adding all the specific details for the sale. Make sure to carefully copy over the customer's info, the products or services provided, a breakdown of the costs, and all associated dates.

Once you have the invoice, you can send it to the customer, usually as an email attachment. Make sure you don't send the blank template accidentally. And make sure you keep a copy of the template somewhere safe, along with a back-up copy somewhere else that's also safe. Because you're going to be sending out a lot of invoices, you also need to work out a naming convention for the files. Avoid having a folder named "Invoices" filled with files named "invoice1", "invoice2", "invoice3", etc. Instead, think of what useful information would be nice to see at a glance in the name, like the order number, client, or date. 

What Are the Drawbacks of Free Invoice Templates?

One of the big drawbacks is how much work you have to put into making sure you've configured everything correctly, which involves digging into complex spreadsheet formulas to calculate things like discounts, prorated costs, and taxes. And because you use the same template to generate all future invoices, any mistakes you make at the start get automatically included. Even the smallest error becomes a big problem if you repeat it enough times.

Once you have everything set up in the template, there's still a lot of manual entry for each new invoice. You have to open up the template, save it as a new instance, and then fill in all the required data yourself. No matter how careful you are, every time you move data manually, you're introducing the risk of human error.

Think of how hard your team works to deliver on promises and build stronger relationships with customers. Now imagine dropping the ball inches from the end zone because of an incorrect or late invoice. The last thing you can afford is to compromise your reputation.  

Putting aside all the other drawbacks, a free template is just one single template, which is fine, but what you need is an integrated system for generating and tracking invoices so you can consistently ensure you're getting paid on time. This drastically impacts your ability to manage and report on Accounts Recievable, or said differntly tracking who still owes you money. You need a way of managing invoices, not a digital cookie cutter for making them one at a time. A template might be fine for making an invoice here and there, but the process is not automated, which means repeating it is time-consuming, and scaling it impossible. Cash is king in every small business. The proper invoicing process and tracking will ensure you don’t miss any oustanding invoices to be paid, as well as ensuring you get paid on time.

Does Better Invoicing Enable Streamlined Bill Pay?

When the invoice arrives with all the necessary information, it makes it easy for your customers to lean on bill pay solutions, like Settle, to easily schedule payment & remit payment in their desired format. When invoicing software is combined with bill pay solutions on the receiving end, the entire process becomes frictionless, leading to quicker payments & a reduction in accounts receivable aging issues. However, if the invoice comes across unclear or isn't easily understood what the charges are for, the payment could be delayed. Working with a company like Decimal that leans on solutions like Settle can also be a way to improve the bill pay process.

What is Invoicing Software?

Invoicing software is a dedicated solution for billing products and services. Because it's how you ensure your organization gets paid, it shows you an accurate "big picture" of your finances, protects liquidity and flexibility, and contributes to a healthy financial future.  

How can Invoicing Software Help You Create Invoices?

With free templates requiring a lot of manual entry, you always risk human error. However, with invoicing software, you get a professional, streamlined system that supports the specific billing requirements of your industry.

Trying to select an invoicing solution can feel daunting. There are hundreds of tools out there promising a better invoicing process. To simplify things for you we will outline key players in the Invoicing space that the Decimal Solutions team have already vetted, implemented, and are actively using within our clients day to day operations. 

Key Solutions Vetted by Decimals Solutions Team: 

  • Dext Commerce - E-Commerce & Retail
  • Maxio (Formerly Chargify & SaaSOptics) - Subscription Based Billing
  • Chargebee - Billing experimentation
  • Ordway - For flexible, usage based, subscription, and complex billing needs
  • Harvest - Professional Services & Project Tracking
  • Ignition - Professional Services & Seamless Signature to Billing Process

Dext Commerce for Real-Time Insights into Digital Sales 

Don’t let that URL fool you; Greenback is now Dext Commerce, and the company can help you automate time-consuming, error-prone processes for faster, easier accounting. 

You can grab transaction data from retailers, e-commerce platforms, and point-of-sale systems to build seamless workflows between digital sales data and accounting, automatically sharing data between departments, ensuring accurate, timely invoicing. You can also get the software to auto-fetch data for receipts from retailers and inboxes expenses, saving you time reconciling.   

Because the data is all moving automatically, you don’t have to worry about chasing it down. The software does the fetching for you. And when it gets delivered right where you need it, you then don’t have to worry that it picked up any manual-entry errors along the way. Faster, more accurate data for less effort.   

Maxio (Formerly SaaSOptics) to Match Invoices to Subscriptions Automatically

When subscriptions are at the center of your business model, you know that signing people up is just the start. Maxio can help with support for subscription management, billing management, recurring payments, accounting and taxes, plus analytics.   

Specifically for invoicing, you can integrate with your subscriptions to automatically bill customers and receive payments. Because you can now see the complete invoicing schedule as well as manage collections, you will know exactly where you stand with outstanding accounts. No more scrolling up and down spreadsheets looking for payment dates. 

Maxio brings a lot of benefits to your invoicing. On the surface, it makes invoices look good, with quick and easy customizations that help you make everything easy to scan and understand for your customers.  Behind the scenes, it makes it easy to take control, with options to send one at a time or in bulk, manually or automatically. 

All that time you save on invoicing existing customers can now go into finding new ones and expanding the business. 

Chargebee to Experiment and Deploy Across Subscriptions

Chargebee understands that standardization is not the same as stagnation, and sometimes you need to mix things up a bit to find new opportunities for growth. So, they offer the ability to experiment with pricing, offers, and discounts across your subscriber base. You can also test different configurations, finding and avoiding any possible problems, from accidental double-billing to proration.

The benefits come from all the ways they ensure your experiments don’t blow up in your face. Want to change up what you charge? You can quickly roll out new pricing models while protecting existing customers through grandfathering. Discovered an exciting new market, but it’s on the other side of the world? Chargebee can help you set up all the correct taxes, so your invoices meet all the new compliance standards.

Automate Multi-Dimensional Usage-Based Billing

Usage comes in many flavors, including single rate, volume, tiered, and stair step, which means there are a lot of moving parts, too many to stay on top of without dedicated invoicing software. Plus, to grow your business, you need a solution in place so you can reliably offer a range of options like free trials, subscriptions, monthly minimums, and spend commitments. In the end, the more dependable your invoicing software, the easier it is for you to pivot to a new billing structure.  

That’s where Ordway comes in. They offer solutions for every step of the metered way, from collecting usage data to sending out detailed invoices with everything your customers need to understand the “how” and “how much” of their bill, including:

  • Formulas
  • Calculations
  • Rating tables

And because you can offer a number of different billing structures, you have more ways to attract new customers and then grow those relationships. You might draw new customers in with freemium or free trials before bumping them up to subscriptions. From there, expand to different levels of spending commitments.  

If Time is Money, Track it and Invoice Accurately

With hourly services and clients adding up, tracking it accurately and promptly invoicing becomes more and more necessary. However, manual invoicing will quickly take up far too much time compared to an automated approach. When more and more variables are added in, like different hourly rates depending on who is doing the work, the manual approach becomes unfeasible. When done manually, tracking time and relaying it to invoices can lead to errors which are the last thing you want to see in your invoice process. 

When it comes to professional services, software solutions like Harvest help track time as well as provide useful insights into financial performance with detailed reporting capabilities. Streamlining the invoicing process helps, but understanding where the best-performing areas of the business and where the most prompt payments are coming from is more and more necessary, especially in a questionable economy. 

Send Out Proposals, Close Deals, and Start Invoicing

Before the work can begin, prospective clients review the proposal and decide whether or not to move forward. Capturing the scope of work, transferring it to invoices, as well as getting paid can be approached in separate steps, but the software solution Ignition App found a way to integrate the whole sales process. 

Consider the prospective client a business just had a conversation with is shopping around and comparing options between several vendors. The quicker a proposal can be in front of the prospect, the better the chances will be at landing the sale. After onboarding, the same system takes care of sending out the invoice and receiving the bill payment. Trying to tackle these activities in separate systems leads to errors and delays with no identifiable benefits. To tackle invoices in the best way, it’s always going to be best to have the technology talking to each other to automate processes whenever possible. 

How can Decimal Help Take the Hassles Out of Invoicing?

It's a question of dedication. For your business to thrive, you need to dedicate yourself to producing and delivering the best products and services. The last thing you want is to get sidetracked by a slow, unreliable system for invoicing. That means you need some sort of dedicated invoicing solution, not a loose mix of random, untraceable templates.

Decimal can help get you set up with a system that works for you, specific to your industry requirements, with a focus on automation so that everything is perfectly repeatable and easily scalable.

Talk to our team today for a free consultation and see where your invoicing process could be elevated.

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