Nothing compares to getting paid for doing what you love. Whether you run a catering company, operate an online store, or offer business consulting services, it’s always a win when you make money from selling your product or service. But how can you ensure your clients or customers know when, how, and what to pay you?
It all starts with an invoice.
An invoice is perhaps the most important document you produce for your business. Think of it as a commercial document given to a customer by a merchant (in this case, you) that states the total amount due for goods or services rendered. That’s a fancy way of saying it's the bill a business sends a client to get paid.
No matter what kind of business you lead, an invoice lists the products or services provided by the seller, as well as payment terms and other information relevant to the customer. For many businesses, the invoice also serves as the buyer's receipt. And without it, you run the risk of missing or forgetting a payment.
Read on to learn more about invoices and why they’re critical to success.
Maybe you have not had to use an invoice before and still managed to receive payment successfully. However, as your business grows, that may not be the case. Besides helping you get paid, an invoice represents who you are as a company. It tells a story about your business — where you are, what services you provide, and what your company looks like. It says to the world that you are proud of what you do all the way through to the final receipt you deliver.
Here are some quick benefits of using an invoice:
There are many types of invoices you can use to get paid, including:
Just like there are many different types of invoices, there are also various invoice formats you can use. No format is better than the other — it all comes down to what makes the most sense for your business.
It can be difficult to keep track of all that should be included on an invoice. If you’re not sure where to start, use this list of some of the most important details every type of invoice should mention:
Tip: Using an invoice template makes it easy for you to make sure you have included all the necessary elements to the invoice.
Invoicing typically takes place after the item or service has been delivered. For instance, if you’re a marketing company hired to create an event flyer, you may send your invoice once the flyer is completed. On the other hand, if you’re a catering company providing food for a luncheon, you may either send your invoice after the luncheon is complete, or you may charge 50% upfront via an interim invoice with the final balance due upon completion of the event.
For large-scale projects and jobs that may take days, weeks, or more and/or require specific materials, businesses often consider a partial payment before the work begins, with the remaining balance due at completion. For more on how to send an invoice, read this.
As for invoice payment terms, this is a personal decision that depends on factors like the industry you’re in and/or whether or not you’re short on cash. Net 30 is generally one of the most common terms, but that doesn’t mean you can’t establish something different for your business, especially if you find yourself looking for tips to address a cash flow crunch. Learn more about invoice payment terms.
Most importantly, give customers an easy way to pay, which, in turn, may help you get paid faster. For instance, PayPal Invoicing can get businesses paid fast. In a recent study, 79% of PayPal invoices are paid within one day of sending the invoice1. That’s much faster than traditional offline invoicing. View our 2-minute “How to send invoices online” video and see how easy it is for you to customize and send invoices, and how easy it is for customers to pay.
Beyond serving as a convenient way to help businesses get paid, many people opt to issue invoices to consumers in order to keep a thorough record of all their income and sales. Both self-employed workers and companies can use their invoices for record-keeping purposes.
Help your business get paid on time by generating an invoice with our easy-to-use invoice template.
In partnership with three expert business owners, the PayPal Bootcamp includes practical checklists and a short video loaded with tips to help take your business to the next level.