What is an invoice? And why is it so important for your business?

Oct 18 2019 | Contributing writer Gene Marks, CPA and small business expert

An invoice is perhaps the most important document you produce for your business. Learn what an invoice is, why it's important, and the three things you need to consider when creating your invoice layout.

What is an invoice?

An invoice is a commercial document given to a buyer by a seller that states the total amount due for goods or services rendered - which is a fancy way of saying it's the bill a business sends a client to get paid. An invoice lists the products or services provided by the seller, as well as payment terms, and any other information relevant to the buyer. For many businesses, the invoice also serves as the buyer's receipt. 

Why is an invoice important?

Besides helping you get paid, an invoice represents who you are as a company. Yes, your bill for consulting services (or any other services that you perform) is just a form - whether a physical document or one generated online. But here’s a fact: it’s viewed countless times by your customers. It’s your brand. It's your image. It tells a story about your business - where you are, what services you provide, what you look like. It says to the world that you are proud of what you do all the way through to the final receipt you deliver. 

How to write an invoice.

So what makes a great invoice? In my opinion, there are three big things you need to consider in your layout: presentation, content, and messaging.

1. Presentation.

Your bill should look the same whether it's mailed or sent electronically. It should represent all that's good about your business. So how do you make it look good?
  • Have a great logo.  Hopefully your logo is professional and unique. If not, then consider getting it redone - there are many online services that will do this for you, or you can look for a graphic artist on freelancer sites. It should be the same logo from your stationary and website. It should be crystal clear and sharp.
  • Instead of or in addition to your logo, have a cool graphic. Some of my customers send bills with photos of their building, or products or a group of their employees.  I've seen beautiful sunsets and hometown cityscapes on bills sent to me from vendors.  A few of them even substitute cartoons or professional drawings for a photo.  A cool graphic like that draws attention.
  • Ideally your invoice should be one page. But don't sweat that detail.  You want to make sure your fonts are large enough so that anyone - even those boomers - can see all the information without reading glasses.  If that means going on to a second page then so be it.
  • Your bill should also be black and white. That's my opinion. Sure, you can colorize your logo or graphic.  But keep the rest of it straight up and easy to read.  Too many colors create confusion and are distracting from the bill's main purpose:  reminding your customer that payment is due.

2. Content.

As said above, the main purpose of sending a bill is to notify your customer that they owe you payment for a product or service rendered.  You want to make sure your invoice has all the information a customer needs to accomplish that task as quickly as possible.  What information is that?
  • Client address:  Include the specific name of the human being this bill is going to along with their address. That's the person you're going to want to talk to if there's any problem.
  • Place where service was performed:  Sometimes the work is done at different locations and you want to indicate that.
  • Your salesperson:  This can be a last name or initials of your person who did this deal. It's important to track their sales (probably for commission) but also to have someone internally who owns this invoice.
  • Invoice number:  Every bill has to have an assigned, unique control number for accounting purposes. Different companies take different approaches to assigning an invoice number and there's no right answer. Maybe you want to combine a number with a date or just have an ongoing log of sequential numbers. 
  • Date: This is the date that the bill was created (and hopefully sent). The clock for payment starts ticking here.
  • Payment terms: Net 30 (due in 30 days) is the most common but maybe you'd like to do a 2% net 10 which means you're offering a two percent discount if you receive payment within ten days.  This is a common practice and a helpful way to speed up cash flow.
  • Service date:  This is the date the service was performed.  That's important for your buyer's accounting department so they can potentially recognize their payable. For example, if a service was performed in March but then you didn’t bill until April (tsk, tsk) then the customer may want to record that liability at the end of March for their accounting purposes.
  • Item description:  This is your place to shine!  Include a detailed description of every item provided or service performed.  As the seller, you need to make sure you're using consistent wording with the buyer's purchase order and your own quote/proposal. Your description should be explanatory enough so that your client has little reason to question all the great things your company does.
  • Price or fee:  This amount should always agree to the buyer's purchase order and your quote/proposal...or you'll have a fight on your hands!
  • Net invoice amount:  Hold your horses:  this is what you're owed before you take taxes into account.
  • Taxes:  Generally the amount of sales tax charged on the order. Tax laws on services performed vary by state and jurisdiction. That's a whole other can of worms!
  • Total invoiced amount: A summing up of the total payment due. It's basically your favorite number on the document.
Sure, it's a lot of information.  But presented the right way, it can be the difference between getting payment when the amount is due or going on a wild goose chase.  Trust me, I've been on that goose chase and it is not fun.
 

3. Messaging.

Many people think that sending a bill is just about getting paid and I agree that's the primary purpose.  But a great invoice can be a lot more.  It can also be a great marketing tool. In these days of overwhelming emails and overflowing voicemail boxes, your invoice is actually the one document you send to your customers that always gets read. So why not take advantage of that opportunity and add a message?

To that end, make sure you're able to customize your bill so that you can include a short note at the bottom.  What do you put in this note?  Maybe you can invite the client to stop by your booth at the next industry trade show.  Or to consider a complementary service.  Or to be aware of a special discount you're offering on something else.  Or maybe just to say thank you for your business or happy holidays or some other personalized greeting that makes a client feel a tiny bit more special.  It works and if you take notice, you'll see a lot of great companies doing that.

The good news about your invoice is that you don't have to do this all from scratch. There are great templates - like this free invoice template from PayPal - that you can use to create and send a bill online to your customers to get paid quickly. Your bill is a critical document.  Don't shrug it off.  Take it seriously.  Make it look great. Investing resources in your invoices can pay off over the long term. 

The contents of this site are provided for informational purposes only. You should always obtain independent, professional accounting, financial, and legal advice before making any business decision. 
 

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Frequently asked questions.

After you send your PayPal invoices, your customers will be sent an email that links to your invoice. Your customer can then review the invoice and choose to pay you online with their debit or credit card, or using their PayPal Wallet.

You'll get an email confirming that we've sent your invoices, and when you've been paid.
 

PayPal invoices are easy to create. Just enter your customer’s email address. Then add an item with its quantity and amount. Add as many items as you like. You can include personalized notes, terms and conditions, discounts, or any attachments your customer might need.
When you’re finished, click Preview to see how your invoice will look for your customer. 

How do I send invoices?

You can send PayPal invoices to any email address in the world. When your invoice is ready, just click or tap the Send button and PayPal’s platform will send an email notification with a secure link to the invoice directly to your customer. If they have a PayPal account, your customer will also receive notifications about the invoice when they log into their account. 

How do I share invoice links?

You can also share links to invoices directly with your customers. On the desktop experience, click Share link to invoice under the Send action. You’ll get a link that lets your customer view and pay the invoice. You can copy the link and your invoice becomes payable. Then share it by email, text, or messaging app. Because invoices contain your customers’ personal information, don’t share the invoice link on a public site.
To share the link again, copy it from your list of invoices by clicking the three-dot icon for the invoice. Or get the link by opening up the invoice details. 

How do I send invoices to multiple customers?

Send the same invoice to up to 100 customers by clicking Multiple customers and entering each email address in the Bill to field. We’ll send a separate, payable invoice to each customer. 

How do I import a batch of invoices?

Create and send a batch of multiple invoices by importing a CSV file if the feature is available in your country. Use our spreadsheet template to fill out the invoice details for each customer. For each invoice, include a customer email address, item name, and item amount. After you import the spreadsheet file, you can view a summary of the imported invoices before sending them. Once you send the file, we’ll email each customer a secure link to pay their invoice. For customer security, PayPal limits the number of invoices you can send in a single day.
Learn more about batch invoices.

Can I manage PayPal Invoicing from my mobile?

You can create, send, and manage invoices on both desktop computers and mobile phones. You can also send and manage invoices on the go with the PayPal Business mobile app. Get the mobile app from the Apple Store or Google Play. Learn more

What are quick invoices?

Quick invoices let you send easy, professional payment requests on your mobile phone. They streamline invoice creation so you can quickly share a link to an invoice with your customer. Your customer will still get a professional invoice including your default business information.

How do I create an Invoice?

1. Log in to your PayPal Business Account.
2. Click Pay & Get Paid.
3. Click Create and Manage Invoices.
4.
Click Create Invoice.
5.
Type in your customer's information.
6. Select the type of invoice and currency.
7. If needed, add shipping by checking the shipping box.
8. To add line items, click the + icon.
9. Add any notes or click More options to add photos. 
10. You can also add your logo to the invoice.
11. Add any due dates, discounts, shipping fees, taxes, etc.
12. Click Send.

Once the invoice has been paid, you'll see its status change in your dashboard.

How do I create and send invoices on the PayPal App?

1. TapPayments, the tap Get Paid.
2. Tap Send Invoice.
3. Tap Invoicing, and tap Create New Invoice. 

 

How do invoices for shippable items work?

If you’re shipping an item or need your customer to give a shipping address, check the Items will be shipped box when you’re creating your invoice. You can then add any shipping costs. When your customer pays, you’ll be able to add tracking information when you ship their order. 

How do I schedule recurring invoices?

You can set invoices to repeat weekly, monthly, yearly, or at a custom interval. When you start a recurring series of invoices, the customer will immediately receive the first invoice. (You also can schedule the recurring series to start at a future date.) The following invoices in the series will issue around 7:00 AM in your time zone according to frequency that you set. 

Can I cancel a recurring invoice series?

 You can cancel a single invoice within a recurring series or the entire series of invoices. To cancel an invoice, tap the three-dot icon for the invoice within your list of invoices. You can also cancel the invoice from its details page. When you cancel an invoice within a recurring series, we’ll ask if you want to cancel the single invoice or the entire series. 

How do I send invoices across national borders?

There’s no extra step to send invoices across national borders. You can send PayPal invoices to any email address in the world.
If your customer has a PayPal account, we’ll display the invoice and email notification in their preferred language. If your customer doesn’t have a PayPal account, we’ll send the invoice and notification email in the language of your account. You can also specify a different language by editing your customer’s contact info when you create the invoice.
Fees vary by country or region. See seller fees.

You can view your invoices by going to the Invoicing section in your PayPal account. On this page, you have many options on how to find the specific invoice(s) you are looking for, how to sort them, and more.

Save customer contact info

We’ll save a list of all your invoicing customers in your settings. You can add more contact info about your customers in your settings or by editing your customer’s information when you’re creating an invoice.

How can I cancel an invoice?

When you cancel a sent or shared invoice, your customer won’t be able to pay it.

Here's how to cancel an invoice or money request on the desktop experience:

  1. Log in to your PayPal account.
  2. Click Activity at the top of the page and then select All transactions.
  3. Click Details next to the invoice you want to review.
  4. Click Cancel invoice and follow the instructions.

Once the invoice has been canceled, an email notification will be shared withthe recipient.

On mobile, find the invoice from your list. Tap the More icon on invoice details and cancel it. 

Can I record payments made outside PayPal?

If your customer pays by cash, check, or another offline method, you can record the payment from the invoice details page. You can also record an offline partial payment if your customer made a deposit or paid an installment. Recorded payments appear in the activity of the invoice’s details page along with any notes you’ve entered about the payments. 

Can I add notes/memos for my records?

To add a note to your invoice for your own records, click or tap the More Options link while you’re creating an invoice. Add a memo that your customer won’t see. If you’ve already sent the invoice, you can add a memo on the invoice’s details page. 

Can I give my customers a receipt?

When your customer pays a PayPal invoice, they automatically receive a payment receipt. If your customer wants another copy of the invoice, you can share a link to the paid invoice or create a PDF to send or print. 

How do I download invoices for my business records?

To download single or multiple PDFs for your invoices, hover over one or more invoices in your list and check each box. Then choose Download from the actions displayed. 

How do I integrate PayPal Invoicing into my website?

With a single integration, you can connect PayPal Invoicing directly into your order management system or website. You’ll need API credentials to connect your PayPal account to your platform so you can integrate PayPal Invoicing with your site.
Integrate PayPal Invoicing.

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