How to Invoice a Company: A Step-By-Step Guide for Small Businesses
Small businesses that offer credit terms for their products and services need to learn how to invoice their customers, whether the customer is an individual or a company.
These businesses send products or perform services first and let the customer pay later. Payment is requested via a document called an invoice.
Learning how to invoice correctly and efficiently will cut down on your paperwork and get you paid faster. This will improve the overall financial management of your small business.
Want to simplify your invoicing process? FreshBooks has easy-to-use online invoicing software that gets you paid 2x faster.
In this article, we’ll cover:
- Select an Invoice Template
- Add Products or Services
- Find the Grand Total
- Include Important Details
- Send the Invoice
- Follow Up
1. Select an Invoice Template
Be sure to invoice your client as soon as the work’s done. Forbes has found that invoices that are sent the same day that a job is completed are 1.5x more likely to be paid.
The first step to create your invoice is to choose an invoice template. There are many free invoice templates available for Word, Excel, Google Docs, PDF and other common formats. FreshBooks has free downloadable invoice templates customized for freelancers and small businesses by industry.
Download the template and open it in the program of your choice.
2. Add Products or Services
Add a separate line item for each product or service you’re billing the client for. Be sure to include a thorough description, the date the product or service was provided and quantities, if applicable.
Your clients want to know exactly what they’re paying for. Don’t lump all the items together. Break out each one to cut down on any confusion that might delay receiving your money.
Then add your flat fee or hourly rate per line item. For an hourly rate, also include how many hours you worked per line item and the subtotal.
3. Find the Grand Total
Find the subtotal of all your line items. Then add anything that will affect the grand total such as sales tax, a discount or a balance outstanding. Add everything together to find the grand total.
Never charge extra fees or late fees that weren’t discussed with the client in advance, says Forbes. At best, your client will be confused. At worst, they won’t trust you if you charge for things they didn’t agree to.
4. Include Important Details
Customize the sample invoice to include your logo, the date, due date, invoice number, reference number (such as a PO#), your contact information, the company’s contact information such as address, payment terms and a personal message, if desired.
Personal messages like “please pay your invoice within 15 days” or “thank you for your business” increase the chance of getting paid by 5 percent, according to Forbes. Plus, being polite will impress the company you’re billing and improve your relationship.
It’s especially important to include clear payment terms, says. It’s usually better to write “Payment is due in 30 days” instead of “net 30” as this eliminates potential confusion.
Also, check with the company first about how they prefer to pay you. Companies may be more strict about how they pay. If they want to cut a check, include on your invoice how to make out said check. If they prefer to pay by credit card, include a link to process the payment.
Below is an example of a simple invoice made in FreshBooks:
Also, double check your invoice for any spelling, grammatical or formatting errors. Sloppy mistakes make you look unprofessional. If you’re a billing a company, they’ll especially frown on these types of errors.
5. Send the Invoice
You have a few options to send the invoice. You can print it off on heavy paper and mail it, fax it or email it. Accounting software will usually email the invoice for you and include payment options.
Don’t forget to include a personal message by including an invoice letter, either as a cover letter or in the email. Here’s an example”
Hi <insert client name>,
Please find attached an invoice for <insert project name and details>. Thank you for your business. If you have any questions, please don’t hesitate to contact <insert name> at <insert contact details>.
<insert your name>
Double check that you’re sending the invoice to the right person. Even if you signed a contract with one person at a company, doesn’t mean they’ll be the one handling payment, says Forbes. A different department may pay the invoice or an outside agency might’ve been contracted to handle payment. Ask your contact first so you don’t waste time.
It’s also important to know the company’s billing cycle. Maybe they only send payment on the first of every month. In that case, it’s a good idea to send the invoice closer to the payment date. Knowing the billing cycle will also help you when you follow up in step six.
6. Follow Up
Your job doesn’t end after you send the invoice. Companies routinely lose invoices, forget about them or are reluctant to pay them full stop. You’ll need to follow up. Invoicing software helps you send automated reminders to cut down on the chase.
People also ask:
How to Invoice a Company as an Individual
Here are some tips to appear professional when you’re invoicing a company as an individual:
- Include a professional header. Use your business name or your full name and include all your contact information so the company knows exactly how to contact you if they have questions. Insert a logo to the left of the header, if you have one.
- Use a professional template. Free invoice templates are one option, as they make sure you don’t omit any important details. Invoicing software makes you appear even more professional, as it often includes options for the company to pay online instantly.
- Bill according to the contract. Companies may want you to sign a contract before you start work. Make sure whatever you bill was already established in the contract as your contact won’t look favorably on surprises. This will delay receiving your money.
- Know who to invoice. Companies usually have a billing department or an external agency that handles payment. Know who to send the invoice to and who to copy.
- Send invoices according to the company’s billing cycle. Many companies send payments on the first of the month. Ask your client when they pay, so you know when to send the invoice and when to follow up.
- Follow up. Well-timed reminders to pay your invoice aren’t annoying, they signal you’re a professional who’s on the ball.
How to Invoice a Company for Contract Work
Follow these steps to invoice a company for contract work:
- Use an invoice template. Include an invoice number and a PO number, if there is one. Provide payment terms such as “net 30” (payment is due within 30 days).
- Include bill to and ship to addresses for the client if you did the work at a different location than where you’re billing.
- Customize your line items to the job. You may need columns for a work order number, part number, unit cost, job details, hourly rate, hours worked and subtotal. If you received a work order, the job details on your invoice must match what’s written on the work order.
- Include anything that might affect the grand total such as sales tax, deposits, discounts and per diems or mileage.
- Detail what payment methods you accept and what your late fee policy is.
- Send the invoice and request the company confirm with you when they receive it. Faxes can go missing, emails are overlooked. If you don’t hear anything, follow up.