What is an invoice?

First, what does the client need?

In the English-speaking business world, an invoice usually flows from seller (supplier, contractor, service provider) to buyer. It's about the goods/services/subscription/advance payment/milestones/recurring charge. Customers check the amount and arrange payment accordingly. Both sides keep a record of it. An invoice is usually distinct from the contract, purchase order or receipt.

Base it on the original agreement between both parties. That's about the scope (confirmed), quantity, price, tax and terms. You don't want the accounting people to have to dig through a long conversation to know why you're charging.

An ordinary commercial invoice is not an invoice issued through mainland China's tax system. If the customer needs a tax invoice, ask what type and information are required. You can't substitute a PDF template for a tax invoice. Location, tax registration, cross-border trade, electronic invoicing and industry rules may add requirements.

• The seller describes the transaction and requests payment.
• Break down the goods or services.
• When to pay and how.
• Keep accounting and relevant tax records.

Design service. Send payment request. Receive payment.

Send a quote with the description and price. On receipt of the balance, make a record of payment. Issue a receipt if required. Don't call everything “Total” — one is the total price. The other is what to pay now.

Now consider another imaginary design job. The total price (in the agreed currency) is 4,800, with 1,800 paid upfront. The final document shows the total price. Payment received. Balance due 3,000. Of course if there are taxes to consider or approved extras, then take those into account separately.

Make the description meaningful in terms of the delivery or service period. “Logo files and social profile assets — final delivery date 18 September” is better for accounts than “Brand design”.

Someone outside the project should be able to check the charge

Things that are generally useful information. Invoice title. Unique number. Date issued. Due date. Full names of parties involved. Their contact information. Reference to project or order. Description. Quantity. Unit price. Tax. Discounts. Credits. Total. Currency. Payment information. Check if there are tax identifiers required or particular wording that must be used for the relevant requirements.

• Document reference: number and date.
• Clear parties involved.
• Clearly worked-out calculations of items.
• Clear payment arrangements, total and payment information.

Email it to the person who will arrange payment

Sometimes it's your regular contact who just okays the work. But they may not be the one to arrange payment. Make sure you know the accounts email address. Billing name. Purchase order number. Do they have a supplier form they need you to fill in? Do they use a specific system for submission? Just putting it in the project chat might not satisfy their submission criteria.

Email subject: invoice number and project. Body of email: amount due now. Due date. Where the payment information is. Who to ask questions.

Confirm delivery and keep a record. Make sure you mark any revisions so accounts doesn't get confused with different amounts for the same invoice.

Customers go through their process of vetting the supplier, ordering, receiving goods or services, pricing, tax, approvals… A simple file does not complete the steps for them.

Use a checkable template to start

Use a simple template. Fill in parties and items. Remove sample customers or accounts. Look at the PDF actually exported. Review the amounts, payment instructions and full addresses on your phone and on a bigger screen. Not just in the editor's screen view.

Have the blank template and an exact copy of what was sent. Reuse frequently used client information and product or service items. Verify the dates, quantities, prices and terms per transaction.

Pocket Invoice is for freelancers and small businesses. Store client and product/service item information. Manage multiple companies. Unlimited invoices. Professional templates. Customize PDFs. Web, iOS and Android access to your account.

• Manage numbering consistently.
• Frequently used accurate client information.
• Frequently used items.
• Preview the final PDF.
• Have searchable invoice history.

Distinct documents for different aspects of the same transaction

When a customer inquires about price, issue a quote or estimate. Then the buyer might issue a PO for the purchase. After you've delivered or reached the agreed billing event, you'd issue an invoice. After you receive payment, record it. When requested, a receipt might be provided. Four different documents are not four sales. A quote isn't immediately earned income.

Link them if needed. If the customer has a PO number, accounts might require that on the invoice to process it. Note the date and amount received and don't chase the same settled amount.

At the agreed billing event

Maybe an advance payment, milestone acceptance, monthly service period or final delivery. Not necessarily the end of all work. Invoice promptly so the client can recognize the charge. Allow time to resolve questions before payment.

For an advance. For milestone acceptance. For monthly service. For final delivery.

September maintenance: that's the service period. Phase-one page production: that's the milestone deliverable. Indicate where you are and what's already paid. An invoice doesn't automatically make the entire contract price due immediately. Also satisfy additional tax requirements around dates and information; the commercial arrangement alone doesn't determine them.

An invoice can't settle an agreement you haven't made

Confirm and note price, scope, revision rounds and payment dates before starting. The invoice reflects the agreed charge for this request. Don't use it to “introduce” a new additional charge for the first time. Search for the contract or quote or confirmation email if some amount is in dispute.

Draft or sent or delivered or awaiting review or partially paid or paid in full. Follow up whatever's not yet done. “Sent” is not “received” or “approved” or “paid”.

Note what happens after sending

Keep the real PDF that was sent. Invoice number in the filename. Note client/currency. Tax-inclusive or tax-exclusive amount. Due date. Status. When payment arrives, payment date/amount/bank reference. Partial payment leaves a balance. Link changes, credits, refunds or disputes back to the original invoice. Don't overwrite history.

Check at month-end against the account records. Match the list of invoices and make sure you allocate the money paid for several invoices to the correct balances. Is there any mismatch? Perhaps fees or withholding tax or discounts. Maybe a mistake. Investigate. Don't simply mark an invoice paid because the bank shows a similar amount.

• Generate and review.
• Send and confirm delivery.
• The client reviews and pays through its process.
• Match actual payments received. Record and retain.

First make the list showing sent, due, partially paid and paid invoices. It's easier than digging through emails to track down those who have not paid.

Use the tools that match your tasks and invoicing intervals

Document template and tracking sheet for one-off invoicing. Spreadsheets help calculate quantities and unit prices. If you invoice regularly for certain clients, look into invoicing software. How the numbering works. The information. The paid status.

Consider full accounting software for purchasing, bank reconciliation, payroll, tax filing. A PDF generator isn't necessarily going to give you all of that.

Pull your own recent transaction. Enter the client. Add items. Deduct an advance payment actually received. Export. Send. Record payment. How does it work for you? As your volume goes up, you'll have more to compare — reuse of customer details, numbers, tax sums, paid status — than just counting features that are advertised.