In a business contract, two parties come together in an agreement where one party agrees to render services or goods to another party and, another party pays consideration for the said services or goods to the first party. To make this concept simple, when you do any business work with a party you expect payment in return from them.
In a formal world, you need to document everything, asking for payment from the other party is also done through a paper, known as an invoice. You need to fill the invoice with proper details, there are certain rules and procedures to be adhered to while filling an invoice, if not filled in proper order the other party can refuse to make the payment.
In this blog, we will try to explain how to fill an invoice step by step.
The first and the foremost requirement of an invoice is the information of the payee that only the payer can identify you. Your invoice should include your business name, business logo, address and your contact information. These particulars should be mentioned in a clear and precise manner so that the payer can recognise you and can contact you for any further assistance.
Assign unique invoice number
Assign a unique invoice number to each invoice, this is also known as a reference number or invoice id. A unique invoice number is the identity of your invoice, it avoids possible accounting errors, free invoicing software minimises the error and the issue of double payments. This number is also helpful for future reference.
There are so many methods to generate invoice numbers i.e., sequential method, chronological method, by customer name and by project name. Make sure to adopt a uniform method for all your invoices otherwise confusion may arise. The sequential method is the most common method of numbering invoices but, you can also choose other methods according to your need.
Mention Important dates
An invoice contains two important dates, one is the billing date and another one is the payment date. When the invoice is generated, it is called the billing date, and when the payment is due by the payer, it is called the payment date. It is important to mention both the dates in the invoice as this gives a clear indication to the payer. The payment date depends upon the prior agreement between the payer and the payee but, if you have not done any such agreement, you can mention the standard billing period of your business.
Display price of goods and services
In a tabular clearly display the price of goods or services rendered by you to the payer along with the quantity so, that payer could exactly know what he is paying for. Free invoicing software makes invoicing easy.
Add tax and finalise the invoice
The most important part of an invoice is tax, tax is levied upon the total amount of the bill. The tax amount depends upon the product you are dealing in, so make sure to calculate the correct tax rate. once you have calculated the tax, finalise the invoice by doing your signature and affixing your stamp.