Accounting 101: What Are the Key Parts of an Invoice?

If you're starting a new business, you need to know how to collect payments from your customers. Learn about the key parts of an invoice in this short guide.

You just completed a complex project for a client. You’re clear on the work you’ve done and how much you’re owed but you don’t know how to draw up the bill. What do you do?

Start by understanding invoices. 

Understanding the specific parts of an invoice is an essential part of running a business. Whether you’re a freelancer, small business owner, or consultant for a big business, invoices are a key part of how you get your money. 

Knowing how to understand and create invoices helps you to read those that come your way as well. We’re going to take a look at the key parts of an invoice today, giving you the insight you need to keep things in order and manage your payments. 

Let’s get started. 

What Are The Important Parts of An Invoice?

To start, it’s important to understand that you can create invoice online if you want to skip the process listed below. 

Invoices are used as documents to request payment. When you send an invoice, you’re listing the work you’ve done and wish to be paid for. 

You might also list the items you’ve sold to another party and need payment for. If you receive an invoice, someone else is requesting payment from you. It’s a simple idea, but it’s important to understand the particulars of an invoice so you can make sure everything is correct. 

To start, you need an invoice number. An invoice number is a number that helps to organize your invoices and keep things straight. It might not seem like an essential thing if you don’t use many invoices, but the other party might have a lot of information to keep track of.  

Personal or Business Information

Much like a letter or a piece of mail, you have to list the name and address of the sender and the recipient. Make sure you include phone numbers and emails as well. 

Even if you’re familiar with the other party and don’t need to use these formalities in person, it’s still important to include personal information on the invoice. 

Item Description and Price

Next, the body of the document should list the product item or service. To the right of the item, write a concise description of the product. Ensure that the writing about the product is clear enough for the customer to know precisely what it is. 

To the right of the description, you should list the quantity of the item in question. If it’s a service or an hourly bill that you’re dealing with, list the number of hours spent on the project. 

To the right of the quantity, you list the price of the item. Don’t list the total price of there’s more than one item or multiple hours, though. Just list the price of one item, or the price of an hour spent on the project. 

To the right of the price, you can list the total price of the combined items. If you have multiple different products or services in the invoice, you can list the next item below the first one in the same order. 

At the bottom of the document, list the total amount due and the date at which it is due. When you’re done, you’ve got a completed invoice!

Want to Learn More About The Elements of An Invoice?

There are a lot of different applications for invoices, so there are bound to be different nuances that come up with different documents. We’re here to help you understand all you need to know. 

Explore our site for more ideas on invoicing, the different parts of an invoice, small business accounting, and much more.  

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