Every business is different in many ways and performs various tasks, services, and sells a variety of products. Each of them needs to be professional whenever it comes to client communication. There are several ways businesses need to communicate with the clients, and one of them is “Invoicing” which is a very important element for getting paid. The invoice should be as professional as the sales pitch and fit your business goals, stand out as a branding factor, and fulfill your client’s needs. A professional sales invoice well fits in fulfilling the core business billing requirements and helps you ensure steady cash flow. For that, you need to focus on creating an impactful sales invoice template that works best for your business.
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What is a Sales Invoice?
There are many business owners who are not clear about what is a sales invoice? People take out many definitions for this type of invoice, but everyone should follow a standard definition of the sales invoice.
According to Cambridge Dictionary, “Sales invoice is a document sent to a customer with a list of products or services they have bought and their prices, any sales tax, the total amount, and the date before which the customer must pay.”
In general, a sales bill will include a description of the provided service and goods, the breakdown of the amount in detail, the deadline for the payment, and how much money the client needs to pay. These tiny details enable you to keep detailed transactions of your sales for accounting purposes.
What is the Purpose of a Sales Invoice?
The purpose of a sales invoice is to feature every single detail about the services businesses have provided to the client. These types of invoices are used to create a compulsion for paying a debt for the goods or services the client has availed. It is considered as important documentation of business transactions for both the client and businesses to keep track of financial records and request payment from customers.
The core reason for using a template of sales invoice is outlining the products or services with a detailed description of each of them, the unit prices of goods or services, and the entire amount charged on the bill, along with the appropriate taxes. Such invoices will help business owners track the sale and manage the store inventory and evaluate the popularity of all the products. With that, you can predict future sales and make important decisions based on the invoices that get paid quickly. On the other side, clients can use the invoice template to keep track of the purchases they have made.
Why Sales Invoices are Important for Business Accounting?
Now that you know the primary purpose of sending a sales invoice template is to request payment for the products and services you have provided to them. It is very important for businesses to get paid on time to remain constant in their cash flow. And for that, they need to send bills to the client on time. So, let’s move on to understand why sales bill is very important for businesses.
Source for precise bookkeeping
Templates of the sales invoice are very important for businesses because every business needs to be clear when it comes to the base for the business’s financial bookkeeping system. A free sales invoice helps businesses to keep the record of a sale. By appropriately organizing and filing all the invoices you have sent to the clients, you will have all the information handy, so that you can use it whenever you need to track the sales you have made, monitor the constant cash flow of the business, and make robust financial reports.
The base for the tax returns
Sales invoices are important as legal documents for verifying the claims you make on the tax returns. Each government recommends that service providers or businesses should keep their supporting documents like invoices in a safe place, in case they need to confirm the information you include during your tax returns. You can also refer the sent invoices before sending your documents for tax returns and create your base clear for the tax returns including revenue and expenses.
Ideal for inventory management
If you are into a small business that sells physical products to the customers, your sales invoices are ideal for inventory management and help you ensure that you always stock up with enough of each most selling product to fulfill your upcoming orders. The best thing is that the sales invoice templates can help you track how much inventory you have and how much stock you will need in the future based on past records and client demand.
The standard for legal protections
The sales invoices can help you safeguard you from inconsequential or unproven lawsuits that may come across your business path. In such a case, sales invoices can help you reveal what kind of services your business has provided to a client and the duration of the work. Especially, when it is signed (not necessary) by clients it becomes very evident for the business.
Collective data for business strategy
Sales invoices play an important role when you are planning your future business strategies. Such invoice templates can help you analyze how much revenue you are bringing in and what changes are there in terms of products and cash flow. You can use the data to forecast the budget of your business plan, for example, you can identify how much cash is available to invest for the business improvement. Based on the previous invoice data, you can identify your most popular and worst products/services and identify the products/services which are not generating income. With all the collective information, you will be able to make strong decisions for your business offerings to make more potential clients.
How to Create a Sales Invoice?
Making a sales invoice is not that difficult as you are thinking, but you need to be careful about certain steps. To help you out we have identified some steps that you can use to create a professional sales invoice template.
Add correct business details
Create an attractive header with a stylish design that includes your business logo (if you have one), company name, address, phone number, and email address. Always remember that, whenever you include your business details your client should remember you by your branding style. For example, we all will recognize Nike Invoices by just seeing its logo. This little attention will help you make an impact on the client's mind.
Include client’s contact information
Below the business information, list out the client’s contact information and customer id. Make sure you have the right contact details with the right department and the right person, especially when you are dealing with a large company and you need to contact the right person. So this is very important that you include the right contact information.
Assign an invoice number
For every template you create should have a unique invoice number assigned to each of them. Make sure the sequence you follow is appropriate and you don’t break the chain. This little care will help you track the invoices for more clarity. If you do not have a numbering sequence in mind, you can begin the numbering sequence from #001 and follow the same continuously. You can also mix your product name and number (#pen001) or just alphabet and number (#A001). Any type of combination you choose for your unique number, you must remember the sequence you have last made and stick to it throughout.
List out the products and services in detail
A brief description of products and services will help your clients in getting clarity about the amount they are paying for. Whatever you include make sure you are itemizing the invoice with every tiny detail that is necessary such as product/service name, the quantity and/or hours worked, and the unit price of the product/service.
Precise payment terms and conditions
Include the total amount due
Including the total amount due including applicable taxes on the sales, the invoice will make a huge impact on the client. Make sure the amount is displayed clearly and in bold highlighted letters so that your clients can clearly see the amount they owe.
Clearly mention a payment due date
If you want to get paid quickly, you must clearly mention a payment due date in your sales invoice. IT is the best way to mention the exact due date, i.e., “Payment due on June 31st, 2020” or “Payment due in 30 Days.”
Now that you all about sales invoices and the easy steps to create it quickly without wasting much time, it is very important that you take care of few things before you start making invoices for your client. It will help you build a positive brand image in front of the clients and also help you look professional. On the other side, the client will be also happy to get all the information they need to know through a clear format and help them know why they are supposed to pay. It will clear their and mind and reduce the chances of getting late payments. So, it is essential that you follow the right strategy for creating good looking robust invoices.
To help you out we always try to cover maximum topics related to invoicing and tips and trick of invoicing templates through our blogs. We hope it is helping you out and will help in the future as well.
1. What is the purpose of a sales invoice?
Answer: The purpose of creating a sales invoice is to provide complete details of the sale they have made for the clients so that the client can easily analyze for what product/service they are going to pay. It includes all the details starting from your business information to the total payable amount along with the description of the products/services.
2. How do I write a sales invoice?
Answer: Wring a sales invoice is not difficult at all, as we have already said this into this article earlier. You just need to follow the step-by-step process to create any kind of invoice template you want to send it to the clients. If you follow the right path and right strategy it will help you get paid quickly.
3. Is a sales invoice a receipt?
Answer: No sales invoice is not a receipt. There is a thin line between a sales invoice and a receipt and that is an invoice is generated before getting paid and a receipt is generated after getting paid. So, it is very important that you know the difference between both because both of them serve different purposes.