How Invoices Are Used by Businesses


Freelance contractors and small businesses should all be familiar with invoices, as they’re an integral part of their business structures. Invoices are simply bills listing the amounts for all of the products and services provided from the contractor to the client. They come in all forms, and can be handwritten on special paper, created with a word processor program, created on a payment portal or professionally put together with invoice software. However invoices are created, they all follow a specific template that should include your contact information, services rendered, charges for these services, payments remitted and payments outstanding. But, there’s more to invoices than this.

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The Purpose of an Invoice

Invoices are simply used to document business transactions. They serve as a record of the services provided from you to your clients, when the services where rendered, and how much is owed for these services. This information can be useful for your company’s internal records and to follow up with clients for billing purposes.

An invoicing system also provides your clients with a receipt for bookkeeping reference and seller accountability. Seller accountability means that if the services or products you provide aren’t satisfactory, then the client can request a refund. However, their refund eligibility will also depend on your billing and invoicing policies.

Information Included on an Invoice

Invoices can vary depending on the services rendered, but they should all be comprehensive and include some basic information that is vital for both you and the client your invoicing. For example, invoices should always include this information:

  • A clear indication that the document is an invoice, such as the word “Invoice” printed at the top of the page
  • Your name or your company’s name and your contact information, including your phone number, business address, email address and any alternate ways of contacting you
  • The client’s contact information, including the client’s name or their company name, their phone number and business address
  • A unique invoice number
  • The date when products or services were provided, the date when the project was completed or the date when the final product was delivered
  • A detailed list of the products or services provided, which will show the client exactly what they’re paying for
  • A breakdown of the costs, which will show the exact cost of each job you performed for them. Depending on your policies, this can be a fixed rate or an hourly rate
  • Payment due date. What date the invoice should be paid by and any penalties incurred for late payments
  • Policies on late payments and details on late payment fees
  • The total amount due. This will be the total amount due after all of the service costs are added together
  • Payment methods accepted, such as cash, bank transfer, check, credit card or online payment portal (PayPal, Skrill etc.)
  • Your payment details

This may seem like a lot of information to include, but there are online resources and software, such as: The Best Invoice & Invoicing Software Online | FreshBooks that will create your invoices for you and include all of this information. Besides that, all of this information will be necessary to make it convenient and easy to clear up any discrepancies on the invoice.

Copyright: tsyhun / 123RF Stock Photo
Copyright: tsyhun / 123RF Stock Photo

The Creation of Invoices

Today, online small business invoicing software is the most efficient and commonly used method of creating invoices. Software online is specifically designed to make invoice creation faster, easier and the most convenient way to keep track of billing documents, the services you’ve provided, the money you’ve made and the money you’re owed. The software will automatically update invoices and notify you when they’ve been sent, when they’ve been paid and when payments are late. This makes it much easier to track your income and/or business revenue.

Online software can also automatically calculate your business expenses depending on the information you’ve provided. This will make filing and paying your taxes easier and more convenient. Additionally, invoices can be sent electronically or printed and mailed or hand delivered to your clients. The software provider will even maintain comprehensive records for you that can be used for backup and future reference.

Getting Paid with an Invoicing System

Small businesses and independent contractors are expected to provide invoices after services have been rendered. Issuing an invoice will make you appear more official and legitimate to clients. Generally, clients won’t remit payment until written documentation of services has been provided to them. An invoice will make them feel more secure with your business transaction, and they’ll be more apt to pay when there’s a clear understanding of what they’re being charged for and how they’re spending their money. Just remember to issue a receipt and mark the bill as paid once payment is received. Issuing receipts is also a vital component of small business invoicing.

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The Convenience of Becoming Familiar with Invoicing

The more familiar you are with invoicing and invoicing software, the easier and quicker it will be to issue prompt and professional invoices. This will help you get paid faster, make it easier to fix payment discrepancies, help you maintain good records of services rendered and financial transactions and help you keep track of late payments and clients who have defaulted. Creating and issuing invoices may seem complicated, but with the help of online software like FreshBooks, this perceived complication can be removed completely.

Software takes care of all of the tedious tasks for you and will keep all of your information organized and secure. Getting paid can sometimes be difficult for freelancers and small businesses, but proper invoicing and invoicing software can remove some of this difficulty and help you get the compensation you deserve for your hard work.


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