What is an invoice?

The short definition

An invoice is a written request for payment. It lists the goods or services you supplied, the price of each, any tax, the total, and the date the money is due. You send it after the work is done or the goods are delivered (or at an agreed stage of a longer job), and the customer pays from it.

For you, an invoice is the record of a sale. It is how you track who owes you money, and later it is the paper trail behind the income on your tax return. For your customer, it is the record of a purchase: their bookkeeper files it, and a business customer may need it to claim back tax they paid.

An invoice is not the same as a quote or estimate (a price offered before the work, which the customer can accept or decline) and not the same as a receipt (proof that payment already arrived). The order is usually quote, then invoice, then receipt. Our guide on invoices vs receipts goes deeper on the last step.

What goes on an invoice

The exact rules depend on your country and on whether you are registered for a sales tax such as VAT or GST. Almost every invoice, anywhere, carries these parts:

• The word "Invoice" at the top, so nobody mistakes it for a quote.
• A unique invoice number. It lets you and the client refer to one bill without confusion. See how to number invoices.
• The invoice date and, if different, the date you did the work or delivered the goods.
• Your details: business name (or your own name), address, email or phone, and any tax or registration number you are required to show.
• The customer's details: their name or company name and address.
• Line items: a clear description of each product or service, the quantity, the unit price and the line total.
• Tax, shown as its own line with the rate, if you charge it.
• The total due, in a stated currency.
• Payment terms: the due date (or terms like Net 30) and how to pay you: bank details, Zelle handle, PayPal address.

Optional but useful: the client's purchase order (PO) number, a short note, late payment terms you agreed in advance, and your logo.

Reading the example, part by part

The invoice beside this article is from a small design studio to a dental office. Here is why each piece is there.

1. INV-0218 is the invoice number. The studio has sent 217 invoices before this one, and the next will be INV-0219.
2. The issue date and the due date. The terms are 14 days, so the due date is printed for the client. Writing an actual date avoids "14 days from when?" arguments.
3. PO 5531 is the client's own reference. Larger clients often refuse to pay an invoice without their PO number on it, because their accounts team matches the two.
4. From and To blocks name both sides in full, with addresses. If the client's accountant has questions in six months, they know who to call.
5. Three line items, each specific: "Brochure design, 6 pages" says far more than "Design work". The revision line shows 3 hours at $75, so the client can check the math.
6. No tax line. This example has no sales tax because the studio does not charge it on this service. Whether you charge sales tax depends on your state and on what you sell, so check with your state's revenue department.
7. Total: $1,515.00, with the payment methods and a request to quote the invoice number. That last line saves you from matching anonymous bank transfers to jobs.

Types of invoices you will meet

Standard invoice

The everyday kind: work done or goods delivered, now please pay. Most of this article describes it.

Proforma invoice

A preview of a future invoice, sent before the sale is final. Importers use one to arrange customs or a bank payment, and some clients need one to get a purchase approved internally. It looks like an invoice but is not a demand for payment and usually does not count as a tax invoice. When the sale happens, you issue a normal invoice. Duebolt can make a proforma invoice with its own number series.

Credit note

A credit note reduces or cancels an invoice you already sent, for example after a return, an overcharge or a cancelled job. Instead of deleting or editing the old invoice, you issue a credit note that refers to its number, so your records still add up. Duebolt does not have a separate credit note document, so ask your accountant how they want corrections recorded.

Recurring invoice

The same bill sent on a schedule: a monthly retainer, a weekly cleaning contract, a yearly maintenance plan. Each one is still a separate invoice with its own number and date; only the content repeats.

Interim and final invoices

On longer jobs you may bill in stages: a deposit, a progress invoice at the halfway point, and a final invoice for the balance. Each stage invoice should say what it covers and what has already been paid.

When and how to send an invoice

Send the invoice as soon as the work is done, or at the stage you agreed. The longer you wait, the longer you wait for money, and a late invoice also tells the client you are not watching your accounts closely.

Email with a PDF attached is the norm for small businesses. A PDF keeps your layout intact on any device and cannot be edited by accident. For walk-in or on-site work, you can share the PDF from your phone before you leave the job. Keep a copy of every invoice you send, in order, along with a note of when it was paid.

If you have never written one, our step-by-step guide on how to make an invoice walks through it, and the invoice examples show filled-in versions for different trades and countries.