The Short Answer

What Is an Invoice?

An invoice is a document a seller sends a buyer to record a sale and request payment. It lists the goods or services provided, quantities, prices, payment terms, and the due date.

How to write one: list your business and the customer, give it a number and a date, describe each line of work with a price, show the total, and state the due date and how to pay. Then send it the day the job is done.

In Plain English

The Bill, Done Right

An invoice is the bill. What you did, when you did it, what it costs, and when it is due.

The job is done, but the money is not in. An invoice that goes out late, or that leaves the customer with questions, is the most common reason.

A Real-World Example

The Painter Who Billed When He Got Around to It

Illustrative example

A painting contractor in Winter Garden, Florida finishes jobs on Friday and sends invoices when he gets to it, often two or three weeks later. Customers pay late because they were billed late.

He starts invoicing from his phone the day each job ends, with a pay-online link on every invoice. The average wait for payment drops by weeks. Most contractors and trades can make the same switch in a single afternoon.

From Dr. Paul’s Fabled Forest

Blueprint Bella and the Perfect Bills

Doctor Owl was at the hardware store comparing two brass hinges when Blueprint Bella stomped in, sawdust on her whiskers.

“Three dams finished,” she said. “Zero coins.”

“Did you send the bills?” Doctor Owl asked.

Bella crossed her arms. “Not yet. Each one has to be perfect first. Measure twice, cut once, measure again.”

Doctor Owl set down the hinges and pulled a plain scroll from his satchel. It had seven lines: Bella’s name, the customer’s name, a number, the date, the work and its price, the total, and the day the coins were due.

“Measure the job twice,” he said. “Bill it once. Today.”

By sundown, three scrolls were on their way from Bella’s Dam Decent Builds. By the end of the week, the coins came back.

From Book 2 of Dr. Paul’s Fabled Forest Business School Series, where every business lesson starts with a story.

Dr. Paul’s Insight

Dr. Paul’s rule: the invoice goes out the day the job is done. Every day you wait is a day you lent the customer money for free.

Put It to Work

How to Write an Invoice

  1. Your business details. Name, address, phone, and logo.
  2. The customer’s details. Name and billing address.
  3. An invoice number and date. Number them in order so nothing gets lost.
  4. Line items. What you did, quantity, rate, and amount, in plain words.
  5. Subtotal, tax if any, and total due. Make the total impossible to miss.
  6. Payment terms and due date. For example, due in 15 days, with the actual date written out.
  7. How to pay. A payment link, check address, or bank transfer details. More than one way is better.
Sample invoiceIllustrative
Invoice
1042, dated Mar 4
Interior painting, 3 rooms
$1,650
Paint and supplies
$310
Total due
$1,960
Due date
Mar 19 (due in 15 days)
How to pay
Pay online at the link below, or by check

Watch Out

Pitfalls When Invoicing

Watch OutWaiting days or weeks to send

Late bills get paid late. Send it the day the work is done.

Watch OutVague line items

If the customer has to ask what a charge is for, payment waits for the answer.

Watch OutNo due date

Without a date, the customer decides when to pay.

Watch OutOnly one way to pay

Every extra step between the customer and paying slows the money down.

Why It Matters

Benefits of Clear, Fast Invoicing

  • Faster payment
  • Fewer disputes
  • Cleaner accounts receivable
  • Better cash flow forecasts

In Your Business Plan

How Invoicing Shows Up in a Business Plan

Lenders want to know how quickly sales turn into cash. A billing routine in the plan answers that in a few lines.

Sample plan excerpt: Operations, Billing

“Invoices are issued the day each job is completed through QuickBooks, with payment due in 15 days and online card and ACH payment available. Past-due accounts receive reminders at 3, 10, and 20 days.”

FAQ

Questions Owners Ask About Invoicing

What should be included on an invoice?
Your business details, the customer’s details, an invoice number and date, line items with prices, the total due, the payment terms and due date, and how to pay. If any of those are missing, payment usually slows down.
When should I send an invoice?
The day the work is done or the product is delivered. Every day you wait pushes your payment back by the same amount, and it can make the customer wonder whether the bill is final.
What is the difference between an invoice and a receipt?
An invoice asks for payment. A receipt confirms that payment was made. You send the invoice first, and you send or keep a receipt once the customer pays.

More From the Series

Keep Building Your Business

Every book in Dr. Paul’s Fabled Forest Business School Series teaches one subject through short stories, real terms, and one-page worksheets.

Dr. Paul Borosky, DBA, MBA

Dr. Paul is a business consultant and author with 14+ years of experience and 1,000+ written business plans. He works with owner-run small businesses on plans, financial projections, and the systems that let a business run without the owner doing everything. This page is part of the glossary for Accounting and Finance for Small Businesses, Book 2 of Dr. Paul’s Fabled Forest Business School Series.

This page is for general educational purposes only. It is not tax, legal, accounting, or other professional advice. For decisions about your own business, consult a qualified professional.