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5 simple steps to draft the perfect invoice

When your business runs on getting paid by your clients in a timely fashion, cash flow is critical. But when you’re a sole trader, there’s no billing police out there ready to chase down your payments as they fall due. For this reason, the right tools — especially a sound invoicing and payment system — are critical.

To help simplify things, we’ve put together five steps to creating the perfect invoice.

Step 1. Start with an invoice template

The first step is easy — either create your own template in a platform like Word or Excel or, alternately (and a lot more simply), use an existing template that comes pre-loaded with your online invoicing software. Make sure you use the same template every time you issue an invoice to help your clients and customers become familiar with your format and system. 

Step 2. Include your current contact details

Sometimes your customers may have a question they want to get in touch with you about. That’s why it’s important that your invoice template includes your contact information: the name of the business, the phone number, the postal address and the email address are the essentials, which should be in your header. The opposite side should contain your client’s billing details.

Step 3. Use a consistent numbering system, and always include dates

It’s one of the easiest steps to forget, but one of the most important. Each invoice you create should have a unique invoice number. Why? Because it guarantees that your invoice will be processed. It also makes it easier to search for and sort at tax time. How you number your invoices is completely up to you: Use numbers or letters, but follow a sequential order to make them easier to manage. Then, include the date the invoice is prepared and the date the project was completed. You should also include a payment due date (whether it’s a specific date, or 30, 45 or 60 days after the invoice is sent) so that your clients know when you expect to be paid. This will help ensure a timely payment, and it also sets up expectations and boundaries with your clients. Ideally it will also help you forecast your cash flow.

Step 4. Specify how you prefer to be paid

Let customers know how you’d like to be paid — whether that’s with a debit or credit card in person, or an online payment. An online system helps make this step much simpler for you and your customers by giving them a one-click payment platform. Customers can pay with their preferred card, and your payment status is updated in your online payments dashboard when the payment is made.

Step 5. Provide an itemised list of services and rates

The bulk of your invoice will detail what services you have rendered, how much time you spent and what fees are due. Including as many details in this section as possible will help your customers understand exactly what they’re paying for, lowering the risk of a query which could delay the payment. Describe your product or service, the date it was performed and/or sold and a subtotal for each line item. When creating your invoice, it’s a good idea to put the total due in bold so that it clearly stands out. You should also include any additional terms and conditions somewhere at the bottom of the invoice

Now, you’re all set to send it out. Payment should be on it’s way.

This article was originally published on Town Square, Square's official small business blog

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