How to Create an Invoice (And 5 Great Sources for Free Templates)

Billie Anne Grigg

Billie Anne Grigg

Billie Anne Grigg has been a bookkeeper since before the turn of the century (yes, this one). She is a QuickBooks Online ProAdvisor, LivePlan Expert Advisor, FreshBooks Certified Beancounter, and a Mastery Level Certified Profit First Professional. She is also a guide for the Profit First Professionals organization. Billie Anne started Pocket Protector Bookkeeping in 2012 to provide an excellent virtual bookkeeping and managerial accounting solution for small businesses that cannot yet justify employing a full-time, in-house bookkeeping staff.
Billie Anne Grigg

Business owners have a lot on their mind, so until the task becomes relevant, we’re sure you aren’t exactly spending free time wondering how to create an invoice. And, even then, for a small business owner using accounting or billing software, the purpose and importance of writing an invoice might not be clear. After all, isn’t creating an invoice just a formality?

The truth is, writing an invoice, structuring it properly, and including the correct information can have a dramatic impact on your business’s cash flow and the ease of your business operations. Whether you use an accounting or billing program, a formatted spreadsheet, or a Word document when creating an invoice, you want to make sure the correct components are included. 

So what is the purpose of an invoice, and why is it such an important business accounting document? How do you create an invoice perfectly for your business to make sure you get paid as quickly as possible? Here’s what you need to know about this important document and its potential impact on your business. (If you’re short on time, below you’ll find our favorite free sources to create an invoice online. You’ll get more info on each of these sources further down.)

The Importance of Writing an Effective (and Accurate) Invoice

First things first: it is important you know that the formula on how to create an invoice isn’t just an archaic formality. An invoice is used to convey lots and lots of vital pieces of information to your customer or client. Examples of this information include:

  • Products or services the customer has purchased from you in detail
  • How much they owe you for these products or services
  • When you expect to receive payment for these products or services
  • The methods of payment you accept
  • Where to send their payment

Hopefully you can see how knowing how to create an invoice correctly could affect your bottom line.

If you provide products or services to other businesses, these businesses will very likely require that you create an invoice and send it over to them before they’ll pay you. Just like you might and most likely require it them.

Writing an invoice is the first step in the accounts receivable process. If you’re using an accounting or billing software to create your invoices, creating the invoice will automatically post the amount of the sale to the correct general ledger accounts. You can then track the total amount each customer owes to you to make sure you receive all your payments.

For your customer, your invoice is the first step in their accounts payable process. Your invoice is a bill to them, and they’ll use the information on your invoice to validate the bill and start the payment process. The clearer the invoice is, the less likely your payment process will get stalled. And what does this mean? You get paid faster. 

how to create an invoice

How to Create an Invoice and What to Include

What should you include when you’re writing an invoice? While there are certainly some differences from invoice to invoice, at a minimum, your invoices should include the following information:

The basics:

  • Your business name (or your name if you’re a sole proprietor)
  • Your mailing address for payment
  • Contact information for any invoice questions. 

Accounts Payable:

  • Accounts payable contact information for your customer or client, including:
    • Customer’s or client’s business name
    • Accounts payable contact name
    • Billing address for the accounts payable contact

Your specifics:

  • An invoice number (This is especially important if you have multiple open invoices for a customer at any given time. An invoice number can help you apply your customer’s payments as intended and serve as a reference number for your customer.)
  • Date of the invoice
  • Payment terms
  • Listing of products or services sold and the price for each product or service
  • Subtotal
  • Any discounts, advance payments, or deposits
  • Total amount due
  • Payment methods accepted

If you’re not getting the gist yet, we’ll say it again: when it comes to knowing how to create an invoice, the structure of your invoice has a direct bearing on how quickly you get paid.

Certain customers—especially large companies, government entities, and project-based businesses like construction contractors—require specific information on invoices in order to process them. You want to make sure you know these.

Some of this information may include:

  • Purchase order number
  • Contract or project number
  • Dates of service covered by the invoice
  • Taxpayer ID number

Make sure you understand your customers’ billing requirements before creating and submitting an invoice so that you don’t risk having your invoice rejected. Often, incorrect invoices are not addressed immediately by the client, and once they are you addressed, you might have to reset the clock on the payment terms—further hampering your cash flow. Do everything you can to make sure there is no room for questions. You don’t want a delayed payment to cause you to miss paying one of your own bills!

How to Create an Invoice That Will Expedite Payment

Beyond getting the basic information right when you create an invoice, there are other things you can do to help increase your chances of getting paid early or on time. Here are examples of certain things on your invoices that can help expedite receipt of your payment:

  • Note a due date or exact payment terms. Many businesses default to “Due upon receipt” as their payment terms. While intuitively “Due upon receipt” payment terms might seem to be the way to get paid the fastest, giving a specific amount of time to pay often results in faster payment. Include both the net terms and due date so there is no confusion whatsoever. 
  • Include any pertinent backup information. If your customer submitted a purchase order, or if you have an engagement letter or contract, it never hurts to include a copy of this with your invoice. This will save your customer’s accounts payable department from having to locate the documentation on their end, which means your invoice will be entered for payment quicker. Win!
  • Accept electronic payments and include a payment link. Many small business owners do not want to incur the costs associated with accepting credit card or other electronic payments, but this is tripping over dollars to save a few pennies. Offering online payments can get you paid 17 days faster than the alternative. That’s just the average, too. It might be much faster for you. So, you see, if you make it easier for your customers to pay you, they will pay you faster. 
  • Invoice on a regular basis. It is easier to collect payment if you invoice soon after the completion of the sale or service. Invoicing on a regular basis ensures that you’re always billing your customers or clients before too much time has passed. Also, if you work with a particular client on an ongoing basis, sending regular invoices helps reduce “sticker shock,” which may occur if your customer receives a large invoice for several orders or months of service at one time.
  • Watch your words. What you say matters when you create an invoice. For example, a simple “please” or “thank you” can increase your chances of getting paid on time by 5%. It pays to be polite, and offers up a positive impression of your brand. Be sure to think about the little things as you’re writing and completing the invoice!

5 Sources for Free Invoice Templates to Help You Write Invoices

If you use billing or accounting software, you likely have a number of invoice templates to choose from right within the software. While you can create an invoice from scratch, there are so many wonderful templates out there that there really isn’t a good reason not to use one. A template will give you everything you need to know if you’re questioning how to create an invoice. In most cases, you can adjust these templates to include specific information, so they cover any needs you might have.

If you adjust an existing template, take the time to make sure all the information boxes align and that all details fit within the boxes. Include your logo as well. The end goal is to produce a professional-looking invoice that is easy for your customer or client to read and understand.

If you aren’t yet using a billing or accounting software package, you’ve got other options. You can buy blank invoice forms at your local office supply store, but these often require you to write invoices by hand and can give your business an unprofessional appearance. Creating an invoice online is your best bet.

Instead of handwriting invoices on forms, give one of these free invoice templates a try:

  1. FreshBooks Free Invoice Creator. FreshBooks is a cloud-based billing, expense, and time-tracking software. If you only need to create an invoice, though, you can use their free invoice creator feature to create an invoice, email it to your client, and save a PDF copy for your records. 
  2. QuickBooks Free Invoice Creator. Similar to FreshBooks’ Invoice Creator, this free invoice generator will show you everything you need to know how to create an invoice and helps you create a professional-looking invoice in just three steps.
  3. FreshBooks Invoice Template Gallery. Also available courtesy of FreshBooks is this free invoice template gallery. You can download dozens of invoice templates in PDF, Word, or Excel format. Then, print them and send ’em off to your clients.
  4. Microsoft Office Templates. If you own Microsoft Office or subscribe to Office 365, you have a ton of templates already available right inside your Word or Excel program. This site gives you even more options, which you can download, open, and edit using your Office software.
  5. Free Google Docs Invoice Template. This link will take you straight to a few blank invoice template, which you can open in Google Docs, customize, and print or email.

how to create an invoice

Write an Invoice That Puts Your Best Foot Forward

You probably came to us looking for a quick solution to send a customer or client a bill. Hopefully, though, you’ve learned that instead of going for the quickest solution here, you (and your wallet) will be better off if you take the time to create the perfect invoice.

Don’t feel bad—taking the time to learn how to create an invoice and write one to perfection is not something a new business owner gives much thought to, nor should you until you have customers or clients. But, as you’ve learned, doing so can help make sure that you get paid quickly. And this really matters the world over, since it has a direct impact on your business’s cash flow. That’s critical at all points in your business, but especially so during the beginning stages.

Including the right information in the format that your customers or clients require also helps establish your expertise in their field. Writing an invoice formatted for products when you provide services, or failing to include critical information often required by your target customers can give the impression you’re not familiar with their industry. 

Plus, adding the proven tricks to speed up payment is a no-brainer. If you don’t have cash flow problems now, you’ll still want to do everything you can to prevent them in the future.

As business owners, we always want to put our best foot forward. Writing the perfect invoice is one easy way to establish your credibility and get off to a great start, while making your own life easier along the way.

Editorial Note: Fundera exists to help you make better business decisions. That’s why we make sure our editorial integrity isn’t influenced by our own business. The opinions, analyses, reviews, or recommendations in this article are those of our editorial team alone. They haven’t been reviewed, approved, or otherwise endorsed by any of the companies mentioned above. Learn more about our editorial process and how we make money here.
Billie Anne Grigg

Billie Anne Grigg

Billie Anne Grigg has been a bookkeeper since before the turn of the century (yes, this one). She is a QuickBooks Online ProAdvisor, LivePlan Expert Advisor, FreshBooks Certified Beancounter, and a Mastery Level Certified Profit First Professional. She is also a guide for the Profit First Professionals organization. Billie Anne started Pocket Protector Bookkeeping in 2012 to provide an excellent virtual bookkeeping and managerial accounting solution for small businesses that cannot yet justify employing a full-time, in-house bookkeeping staff.
Billie Anne Grigg

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