How to Make an Invoice?

Whether you deliver a pizza, a marketing strategy, or a Tesla, you need to get paid.

And you can't get paid until you send an invoice reflecting services rendered and other necessary details.

This article will take you through the step-by-step process you need to create comprehensive, accurate, and compliant invoices, and demonstrate how Docupilot can help you automate and scale digital invoice processing.

Let’s begin.

What is an Invoice?  

An invoice is a formal financial document businesses, freelancers, and agencies use to request payment. There are different types of invoices, including basic, overdue, and proforma invoices, each designed for a particular situation. In most cases, invoices are sent after provision of goods and/or services.

Why Proper Invoicing Matters  

Invoices are a critical component of accounting and financial operations:

• Invoices serve as a documented record of financial transactions for bookkeeping, compliance, and audit purposes
• They help track outstanding payments to ensure the availability of cash flows needed by organizations for business continuity.
• Structured, detailed, and accurate invoices convey professionalism, enhance credibility, and build client trust.
• Clearly stated amounts, payment terms, payment methods, and due dates set expectations, provide clarity, and help avoid misunderstandings and delayed payments.

How to Write an Invoice for Payment  

Whether you prefer handwritten invoices, use a word processor like Microsoft Word with a free invoice template, or favor financial document automation platforms like Docupilot, the steps you need to follow to create invoices are the same.

Step 1: Be aware of relevant regulations

Before creating an invoice, make sure you are aware of relevant and applicable accounting regulations, like Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).

Step 2: Gather necessary details

You must have all relevant details in hand, including

• Big picture items, such as information about your client, the project/tasks completed by you/your company, and terms and conditions agreed-upon by both sides for the provision of services.
• Details, including the products and/or services you are going to bill for, their quantities and unit prices, payment terms, and accepted payment methods.

Step 3: Set up the structure and layout

Once the invoice structure and layout are defined, you can add and edit details. Start by setting up the overall structure of the document. This is especially helpful when you use invoicing software: you can create an invoice template and reuse it as many times as needed.

To set up structure and formatting

• Select an orientation (landscape or portrait) and margins
• Add tables and text boxes in which you can add text and numerical details
• Use a clean, professional design with a readable font and sufficient white space
• Include branding elements such as your business logo and colors

Step 4: Give the invoice a title

Nobody should have to think twice before deciding that they are holding a professional invoice in their hands. To prevent ambiguity and misunderstandings, title it as an INVOICE in a large, bold, and clear font at the top of the document.

Step 5: Add a unique invoice number

Each invoice must have a unique number to help you and your clients track and manage them. Use an invoice numbering system that helps you distinguish between clients and projects, for example, ABCD-PROJ-YY-MM-XXXX, where

• ABCD is the client ID
• PROJ is the project ID
• YY and MM refer to the year and month respectively, and
• XXXX is a unique sequential number for each invoice that resets at the end of each month

Step 6: Add the date

The date is critical because it is the benchmark for subsequent financial processes, including

• Payments: Without a clear invoice date, clients will not be able to determine when payment is due (as defined in the payment terms)
• Tracking delivery: The date informs a client if they have sufficient time to arrange funds and make payments or if they have received invoices late, in which case they have a valid reason for delaying payments
• Discounts: If you offer early payment discounts, the date will help clients decide if they qualify for such discounts
• Accounting and taxes: Invoice dates are necessary for recording transactions in relevant financial periods and tax reporting

Step 7: List your company name and information  

Add information about your business, including the legal name, address, contact details, and website URL (if applicable).

Step 8: List client information

Add client details, including their legal business name, address, and contact details.

Step 9: Provide an itemized list of goods and services

Provide a detailed, itemized list of goods and services provided by you/your company, and add unit prices, quantities, and relevant subtotals.

Step 10: Add tax information

Calculate and display applicable sales tax, VAT, etc.

Step 11: Calculate and display the total amount due

Calculate and include the final amount the client needs to pay, including taxes and applicable discounts.

Step 12: Include payment terms  

Clearly define the payment terms, for example

• Net 30: Indicates payment is due 30 days from the invoice date
• 1/15 Net 30: Indicates a 1% discount for payments made within 15 days, with the full amount due in 30 days.
• Due on receipt: Indicates payment is due as soon as the client receives the invoice
• Cash on delivery (COD): Indicates payment is due on delivery of goods

Step 13: Add payment methods 

Businesses can opt for different payment methods depending on their preferences, procedures, and operational constraints.

Multiple payment options make it easier for businesses to pay on time, which will ensure you have funds available for paying salaries, expenses, and providing services.

So include multiple payment options and avoid putting restrictions on accepted payment methods.

Step 14: Check and recheck

Inaccuracies and missing information can cause misunderstandings, delayed payments, and in a worse-case scenario, legal disputes.

Make sure to check everything as many times as you need to be sure the invoice is comprehensive and accurate. Then check again.

Step 15: Deliver the invoice

Maybe you often plug in your smartphone to a charger but forget to switch it on. It happens to everyone, no hard feelings, no damage done.

But if you spend time and effort in creating an invoice and forget to send it, that will cause multiple problems. And the same principle applies if you send the invoice but it isn't delivered.

To prevent any snafus, it is important to set up processes that ensure on-time delivery and receipt of invoices. Invoicing software make this simple and hassle-free with prompt email delivery of digital invoices.

How Docupilot Simplifies Invoice Creation and Management   

Docupilot is a powerful financial document automation platform. You can use it to create professional invoices, balance sheets, income statements, cash flow statements, and more.

Features like a template library, support for Word invoice templates, basic and advanced conditionals, dynamic tables, advanced formatting, and numerical calculations make it an optimal choice for the creation of financial and business documents.

With the soon-to-be-launched AI Builder. you will also be able to create invoices with just a few well-defined prompts.

Docupilot integrates with 70+ third-party apps like Zapier, Make, and DocuSign, for workflow automation, electronic signatures, and more.

Follow this simple step-by-step process to generate custom invoices with Docupilot.

Step #1: Log in to Docupilot

Log in to Docupilot with your credentials.

Step #2: Create or Upload a Template

Click the ‘Create Template’ button. 

• Click on ‘Online Builder’ to create a contract template from scratch
• Click on ‘PDF’ or ‘DOCX’ to upload an existing template in the respective file format
• Click on ‘Pick From Gallery’ to use a template from the Docupilot library

Once your template loads, you can

• Add static static content like text, images, and tables
• Add dynamic content, which is content that changes from invoice to invoice, like invoice numbers, client addresses, etc. Use merge fields to add dynamic content. The format for merge fields is {{company_name}}, {{client.name}}. To fill these fields, you must connect your template to the relevant data source(s). 
• Apply formatting.

Step #3: Generate the Invoice

Once a template is ready, you can test it by clicking the ‘Test’ button.

Docupilot will render a preview of your template, which you can review and edit if required. 

Once satisfied with the template, you can generate the invoice, deliver it to a client, or store it online.

Streamline Your Invoice Workflow with Docupilot  

Docupilot simplifies the process of creating invoices by allowing businesses to generate professional, customized invoices in minutes using automated templates. With its dynamic data population feature, you can pull client details, service descriptions, and payment terms directly from data sources, reducing manual entry and errors.

The platform integrates with accounting and payment systems for a seamless invoicing workflow. Additionally, Docupilot enables users to send invoices in multiple formats and collaborate effortlessly on revisions. By automating invoice creation, you will save time, maintain accuracy, and ensure faster payment collection.

Sign up for a 30-day free trial and start automating your invoicing processes.

Frequently Asked Questions  

What is the best format for an Invoice?  

There is no one-size-fits-all format. This is because different circumstances necessitate different types of invoices, each with a slightly different format.

When creating an invoice, make sure it contains necessary details that provide clarity and prevent disputes and complies with relevant accounting standards.

Can I automate recurring invoices?  

It's easy to automate recurring invoices with financial document software. With Docupilot, for example, you can create your own invoice template, and use Zapier integration to automate creation and on-time delivery of recurring invoices.

What should I do if a client doesn’t pay on time?  

Numerous legal remedies are available for collecting overdue payments, including engaging a debt collection agency or filing a legal claim.

However, you can start off by sending an outstanding invoice to remind the client about the overdue amount.