How to Generate an Invoice: A Guide

Generating an invoice is a crucial part of running a business, whether you're a freelancer, a small business owner, or running a large enterprise. A well-crafted invoice ensures you not only get paid on time but also maintain a professional image.

In this guide, we'll walk you through the steps to create an invoice, as well as some useful tools and best practices to streamline the process.

Why invoices matter

An invoice is a document that outlines the services or goods provided, the payment terms, and the total amount due. A clear and accurate invoice helps you get paid on time, keep financial records, and shows your professionalism.

A step-by-step guide to generating an invoice

1. Choose how to create your invoice

You have a few options for making an invoice:

• Free invoice templates. You can find free invoice templates online that you can customise to suit you. These templates are a good starting point if you're new to invoicing.

• Invoicing software. Specialist software offers a more streamlined approach to creating and managing your invoices. Tools like Zoho Invoice or QuickBooks offer features like automatic numbering, tax calculations, and payment reminders.

• Microsoft Word or Google Docs. You can use Word or Google Docs to create an invoice from scratch or with a template. This method gives you greater flexibility but will require more manual work.

2. Include the key information

Make sure your invoice includes the following:

• A professional header. Start with a clear header that includes your business name, logo (if applicable), and contact details. Include the client's information as well.

• A unique invoice number. Include a unique invoice number for tracking purposes. This helps both you and your client reference the invoice with ease.

• The invoice dates. Clearly state the invoice issue date and the date when the goods or services were delivered. These dates help establish a payment timeline.

3. List the goods or services provided

Write down everything you provided in detail and the total amount. For each item, include:

• A clear description of each item or service

• The number of units or hours worked

• The cost per unit or hour

• The subtotal for each line item

• The VAT amount, if applicable

4. Set your payment terms

Clearly outline the payment terms on the invoice. This should include:

• Your accepted payment methods, such as credit card, PayPal, or bank transfer.

• When the payment is due.

• Any penalties for late payments, if applicable.

5. Customise your invoice

Add a touch of brand identity and make your invoices stand out by customising them. Consider:

• Adding your business’ logo.

• Incorporating your brand’s colours and fonts.

• Including any additional notes or terms and conditions that might be relevant.

6. Send the invoice

Once your invoice is ready, send it to your client. You can do this in a few different ways:

• Attach the invoice as a PDF and send it by email.

• Use online tools to send the invoice and set up payment reminders.

• For clients who prefer traditional methods, you can also send a physical copy.

7. Follow up

If you don’t receive payment by the due date, send a friendly follow-up to your client. A polite reminder can help to get the payment process back on track.

To get your invoices paid faster, consider invoice finance. With Penny, you get paid in as little as two hours once approved. This gives you fast funding without having to wait for lengthy payment terms.

Tools and resources

• Online invoicing software. Tools like Zoho Invoice and QuickBooks can automate many aspects of invoicing, saving you time and reducing errors.

• Microsoft Word and Google Docs. These free programs are a flexible option for creating invoices from scratch or using templates.

• Free invoice templates. Available on various platforms, these templates can provide a starting point for manual invoicing.

Generating an invoice doesn’t have to be complicated. By following these steps and using the right tools, you can make professional invoices that help you get paid on time and keep a good business relationship with your clients. 

Whether you use free templates, Google Docs, or invoicing software, the key is to be clear, accurate, and consistent.