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Everything You Need to Know About Invoicing and How It Can Help Your Business

Mohammad Khan Yusufzai is Masters in Management, specializing in Economics, Finance and Marketing, with corporate & lectureship exp.


Invoices, receipts, bills, whatever you call it, they are probably the simplest matter of running a business, plain white sheets of paper without any glamour or glitter. But these simple straightforward invoices are still one of the most important documents, both for your business and its customers. So you must get clarity over what they are and how you can use them to the advantage of your small business.

What is an Invoice?

In simple terms, an invoice is a document that you send to your customer after they purchase goods or services from you. It intends to serve both as a recording of sales and an official request to them to pay the business.

USlegal Inc defines an Invoice as, "a document or electronic statement stating the items sold and the amount payable."

An invoice declares in writing what exactly the customer purchased from you, the date and place of purchase, in what quantity, and at what price. Thus invoice is an important document for your customers too.


How Does An Ideal Invoice Looks Like?

There's no legal format as to how your invoices should look like. But they must be concise, to the point, and convey all the required information that your customer needs in one place. Ideally, your invoice must have the following elements:

  1. The word "INVOICE"
  2. Invoice number
  3. Date
  4. Name and address/contact details of your business
  5. Name and contact of customer
  6. Product or services offered along with the breakdown of their details
  7. Quantity and Cost per unit
  8. Tax rates
  9. Discount (if any)
  10. The Total Amount Payable
  11. Details of payment and,
  12. A personalized note

Looks a little overcomplicated, right? Don't worry because technology got you covered here. Digital Platforms such as OnlineCheckWriter offer to create invoices instantly, rather than writing or typing every detail manually.

By now you must have understood what invoices are and what information they contain

Let's now look into 7 ways how invoices can help your small business grow.

Invoices Are The First Step In The Payment Process

Finances are the backbone of any business. As a business owner, there's nothing more unpleasant than chasing after the money you are already owed. Invoicing helps you get paid efficiently since they contain all the relevant information your customers need to pay, such as

  • Quantity of product or service and their breakdown,
  • The total amount payable after any discount,
  • Details about how to pay, and
  • late payment fees or possible legal actions.

After getting all the information they need, your customers don't have any excuse to not pay you. And the little detail about late payment fees will be a good reminder for them to pay you on time.


Invoices Help in Customers' Satisfaction

Invoices keep your customers happy and this is what your small business is ultimately aiming for, right? An invoice gives all the details and payment breakdown so that the customers know exactly what and why they are charged for. They are satisfied to know that there are no hidden charges or processing fees, and the money they are paying matches with the products/ services they received.

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Not only that, but you also help them to manage their finances by giving them information through invoices on what they purchased, when, for what price, any late fees, and so on. This is really useful information for your customers to keep track of their cash.


Invoices Display Professionalism

Professionalism is something that is often overlooked by small businesses, but this is, what makes your business stand out from others. A properly put-together, well-designed, and presentable invoice will help you to be more professional and give you a competitive advantage.

Every time your customer decides to have a communication with you, they will see a professional invoice and they will build trust knowing that they are dealing with although, a small but a very well-managed, reliable business.



Invoices are a Smart Way of Branding

You already know that a proper invoice can help you build trust with your customers, but you can take a step forward and use invoicing for building a brand image of your business. This might sound tricky to you but your invoice can give a general idea about what your business offers and can even include a personalized thank-you note. This little thing helps to build brand loyalty over time and will surely help you to grow your small business.


Organizing and Maintaining Your Records.

The most important benefit of an invoice is the ability to keep a legal record of your sales. This makes it possible for you to find out when a good was sold, who bought it, and who sold it. This reduces any chances of fraud by employees and verifies your records if the need arises. Moreover, as a source document, they form the basis of all your book-keeping activities which means your accounts are as accurate as your invoicing practices.


Although you are not legally required to provide invoices still it can be a real help if you ever find yourself in a tricky situation. A proper invoice is legal proof of an agreement between you and your customer on a set price. It protects your business from fraudulent lawsuits.

Should you ever find yourself in a position where a customer doesn’t pay you, despite receiving multiple payment reminders from your side, your initial invoice will act as legal proof that a product was sold or an agreed service was carried out, and the customer hasn't paid you so you are opting for legal means to get your due payment.


Useful Tool for Business Analytics

Invoices can offer you great insights if you know how to utilize them for analysis. You can gather useful business information such as your customers' buying patterns and identify trends, popular products, peak buying times, price drop patterns, and much more. This will help you to come up with an effective marketing strategy and pre-plan your activities to get the most out of your marketing efforts.



By now you must have understood how important invoices are for your business. When used smartly invoices can be a great tool for pushing your small business towards success. Not only do they provide documentary proof for you and your customers, but they also give a professional and well-reputed image to your business. And if you still haven't started invoicing for building your business's brand image, then you should start right away.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2021 Mohammad Khan Yusufzai

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