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How to write an invoice

Make sure your business gets paid right the first time by following 9 easy steps.

An invoice with mistakes can create delays in payments and disrupt your cash flow. But by following a few steps, you can make sure all of the necessary information is recorded the first time around and prevent hiccups later on.

What is an invoice?

An invoice is a document sent by a business, freelancer or contractor to indicate a transaction and request payment for a service or product provided. A well-formatted invoice ensures you get paid in a timely manner — and provides documentation in case of an audit by the IRS, as it shows a proper record of your income.

How to write an invoice in 9 steps

Generally, the structure of an invoice depends on the industry you’re in. But there are a few universal elements and steps that can be followed. If you're working from scratch, a spreadsheet can be a great starting point.

Step 1: Fill out the name and address of your client or customer.

Your recipient’s information should include your client’s full name and mailing address. Making sure this information is correct ensures the invoice reaches the right person. It also provides a partial record of the income source once you get paid.

Step 2: Assign a unique invoice number.

Every invoice you write will require a unique invoice number. It's the best way to keep your records organized — especially at tax time.

You can do this by using invoicing software orgenerating your own sequential system. The word "invoice" followed by the invoice number is generally found at the top of your invoice so customers can immediately identify the document.

Step 3: Fill in your company name, address and other details.

Make sure to include your company’s legal name, business address, phone number, email and website at the top of your invoice. If you have a company logo, be sure to add that as well.

Step 4: Date your invoice.

Add the date the invoice was created as well as the date that payment is due. Also include the date you performed the service or delivered a product. This is especially useful if your client has a question or dispute.

Step 5: List your method for payment and payment terms.

Generally, you will include what methods of payment you accept, how to pay you, any late fees your customer may incur for late payment and payment terms. Also list if you offer any money-back guarantees or warranties.

Step 6: Fill in an itemized breakdown of your product or service performed.

Be as clear as possible when describing the product or service you provided. Instead of a general description — like "work performed" — itemize exactly what work you did. It can help your customer better understand what they're paying for.

Step 7: List any other charges.

Add in any taxes you’re required to charge. Also add a line for shipping costs or discounts, if applicable.

Step 8: Fill in the total costs for your product or service.

After the itemized breakdown of each line item, include the quantity and the cost. This can include your hourly wage, subtotals and totals, as well as any other charges that may apply. 

The final number at the bottom should be the total amount owed. You may want to emphasize this by using a bold font so that it stands out and including it at the top of the invoice near the invoice number and date.

Step 9: Include a thank you.

A short note at the bottom of your invoice is a great way to end your document on a positive note.

Pro tip: Use an online template to help!

An invoice template is a good jumping off point to make sure you include all of the necessary information — and that it looks professional. There are many free templates available online, and many are customizable. Some are even specially designed for specific industries or purposes.

To get started, you may want to check out Microsoft Word and Excel for free invoice templates. They're fairly basic, but the Excel version comes with formulas that can calculate subtotals, sales tax and discounts for you.

Some payment services like PayPal and Square also have built-in generators to make invoicing and requesting payment easy.

What to include in an invoice

What you include on your invoice likely depends on the service you provide or the work you perform. But virtually all businesses will want to include the following:

  • The word invoice and a unique invoice number
  • Date you're billing the invoice and the date payment is due
  • Your company name and contact information
  • Customer's name and contact information
  • Detailed descriptions of the products or services, dates provided, unit prices and units
  • Taxes, discounts or shipping charges
  • Total amount payable, payment terms and accepted payment types
  • A thank-you note to your client

Bottom line

Chasing late payments can be frustrating and takes your focus away from running your business. You need an invoice to get paid right the first time — and your customer needs an invoice to know how much they owe and when they owe it. For even more ways to get all your business finances under control, check out our 17 tips to managing your small business's finances.

Frequently asked questions

What are the different invoice types?

Some invoice types include:

  • Standard invoices that bill for goods or services provided
  • Credit invoices that provide customers with a refund or discount
  • Debit invoices sent after an initial standard invoice to increase the amount a client owes
  • Proforma invoices, which are sent out before you provide goods or service

How can I personalize an invoice template?

Most online templates let you personalize your invoices by adding your logo, changing the color of the template, rearranging items and adding more details or line items.

Many also allow you to add or adjust sales tax, discounts and more. But keep in mind that not all online templates allow for personalization, so find one that works best for you.

How do I create an invoice in Word or Excel?

Explore and download a wide range of templates for both Word and Excel. Start your search by going to the Microsoft Office templates website. Some offer customization, while others don't. You'll have to sort through and find the right fit for your business, which may take some trial and error.

If you want to make an invoice in Word or Excel from scratch, simply boot up the software and follow the steps outlined above.

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