An invoice number is one of the simplest methods to organize your business payments. In addition, using an invoice number makes life easier for your clients. Let’s take a closer look at what is an invoice number, how invoice numbers work, best practices of invoice numbering, invoicing number examples and how you can use them to grow your business more efficiently in this blog post.
Learn all about invoice numbers:
- What is an invoice number?
- Why is an invoice number important?
- Do invoices need an invoice number?
- What invoice number should I start with?
- Invoice numbering best practices
- Invoice number examples
- Invoice numbers frequently asked questions
- Save time on invoice management with CheckYa
1. What Is an Invoice Number?
The best way to understand an invoice number is to put it in context. A professionally constructed invoice number typically contains multiple elements:
- The invoice number
- The invoice date
- Payment due date
- Your business name
- Your business contact details
- Your client name (this might be different from your day-to-day contact if you are working with a larger company. For example, you might be asked to address your invoice to an accounts payable department
- Your client’s contact details
- Line items with pricing for each (e.g., “WordPress Website Development: 10 Hours at $100 Per Hour: $1,000).
- Payment instructions: Don’t make your clients guess how to pay you – the invoice is an excellent place to reinforce your payment expectations. Do you want clients to pay you via CheckYa? Make sure your contract and invoice reinforce this expectation.
- Notes: adding additional notes to the invoice is optional.
Eg: CheckYa invoice
Given that your invoice includes all this information, why does an invoice number matter? It is a quick reference that makes tracking and communication easier. We’ll explore this further in the next section.
2. Why Is an Invoice Number Important?
Many larger companies have invoice and payment expectations. These companies will not issue payments unless they have a valid invoice. Each company has different policies, requiring invoices to have an invoice number, date, and description.
To avoid payment delays, your client onboarding process should cover invoicing procedures and specific requirements. Failure to meet these requirements could result in payment delays.
Even if your clients do not require an invoice number, it is still wise to use an invoice number. You can communicate more effectively with clients when using an invoice number. For example, imagine if a client is very late in paying your invoice. In that case, you might need to invoice late fees.
If you decide to pursue late fees, it is convenient to reference the invoice number in your communication. Even if your clients don’t insist on having an invoice number, there is another reason why you should use one.
When you start your business, it probably feels like you keep track of everything in your mind. As you add in more clients and start to provide more services, you might start to send 10, 20, or even more invoices out to clients each month.
Tracking these different invoices is far easier when you have a single invoice number to support your invoice tracking system. An easy-to-reference invoice number makes it easier to be efficient when you monitor your business.
You can quickly tell how many invoices you’re sending out to clients, earnings per client, and the most popular services you’re selling. You might find that one type of service on your invoices is far easier to sell and more profitable than others. When you find that trend, seize the advantage by selling even more of that service.
3. Do Invoices Need an Invoice Number?
Yes, invoices need an invoice number. An invoice number and date are the most common ways to identify an invoice quickly. If you want to save time on invoice management, using an invoice number is a wise idea.
Also, failing to include an invoice number may cause payment delays when you deal with larger clients with more sophisticated accounts payable processes and policies.
4. What Invoice Number Should I Start With?
For most businesses, it is up to the business owner or the person who sends invoices to choose the invoice number. That said, some newer business owners may feel that sending out an invoice called “invoice 1” may send the wrong message to clients (i.e., that your business is brand new and you are untested).
To ease these concerns in your mind, simply number your first invoice as #100. Now let’s look at how to use invoice numbers effectively as your business grows!
5. Invoice Numbering Best Practices
Taking a few moments to learn how to use an invoice number effectively is a simple way to make your business more efficient. In addition, it also makes your invoices easy for clients to understand and pay. To maximize your invoice efficiency, use the following best practices.
5.1. Start With Client Invoice Needs First
Keeping clients satisfied is crucial if you sell services to clients as a freelancer, consultant, or agency owner. In most cases, clients care most about your work deliverables (e.g., the website you created for them) and your customer service (e.g., responding to their questions and comments on a timely basis). Once you have covered those two aspects of client service, it’s time to look at your invoicing practices.
As part of your client onboarding process, state your invoice process (e.g., “you can expect to receive your monthly invoice on the 1st business day of the month, and payment is due by the 15th of every month.”).
After you summarize your invoice and payment process, ask the client if they have any questions or concerns. For example, is there a different email address you should send your invoice to? Does the client’s finance or accounting department have specific requirements? They may ask you to use a particular type of invoice number (e.g., for invoices sent in October, please start invoices with OCT – like OCT100, so that we can stay organized).
If the client has no particular invoice requirements, use the other best practices below to set up your invoice process.
5.2. Increase Your Invoice Number By A Set Number Each Time
Sending accurate invoices matters, but it should not take up much of your time. Therefore, it is helpful to have simple rules to follow. We recommend you increase your invoice number by 5 or 10 with each invoice you send. For example, the first invoice you send would have invoice number 100. The second invoice would be 105, and the third one would be 110.
In summary, increase your invoice number by 5 or 10 each time you send an invoice.
5.3. Track the number of invoices you send out
Each month, take a few minutes to review how many invoices you are sending out to clients. CheckYa lets you send unlimited invoices, so you can send as many invoices as you need. That said, keep your client’s needs in mind. If a client receives three, five, or even more invoices from you each month, there is an increased chance of a payment problem. In this case, it may be time for a change.
Consider changing your approach to sending out invoices by changing to a single monthly invoice. This single invoice can have multiple line items to cover everything you delivered to the client. By sending a single invoice to each client monthly, you can also minimize the time you spend creating invoices and verifying that they are paid on time.
5.4. Use An Invoice Checklist Every Time
Sending an incorrect invoice is one of the fastest ways to look foolish in front of clients. That’s not all – an invoice with errors may result in the client refusing to pay you until you send a corrected invoice. That’s why it is helpful to use an invoice checklist when you first get started running your business. Review the checklist every time you prepare an invoice to detect errors and oversights.
- Does the invoice have an invoice number?
No invoice number means a greater chance that your invoice may not be paid. Use our
invoice number rule of thumb: increase your invoice numbering by ten each time.
- Does your invoice has detailed line items?
Failing to include a description is one of the fastest ways to have a client question your invoice and potentially delay payment. Descriptions are especially important when you are billing larger amounts than usual. For instance, if a client is used to paying you $5000 per month and your next invoice will be $8,000, communicating clearly about the change is essential.
For example, you might be charging an additional fee because the client asked for last-minute emergency services. If so, you may want to add a separate line item for “emergency services request – DATE” (e.g., “Emergency Website Services – October 2”) on the invoice.
- Does the invoice reflect the correct tax amounts?
Failing to charge tax amounts (e.g., sales tax) is an invoice mistake that some new business owners make. The tax situation may become more complicated if you serve clients in different countries and locations.
For example, self-employed people in New York have to consider a variety of taxes in their business. Contact a tax accountant to ask for advice tailored to your needs to clear up these questions. Once you get the answer, add it to the checklist.
For instance, your accountant may say that you must collect a sales tax of 13% on all your invoices. In that case, add a reminder to your invoice checklist to verify that you have charged the correct tax amount.
- Are you sending your invoice at the correct time?
Even if you have a valid invoice number and billing amounts, you may run into problems if your invoice is sent incorrectly. For instance, you may feel a desire to send an invoice when you’ve made progress on a project or if you simply want more cash flow! Rather than letting your feelings choose when to send invoices, use a standard procedure for invoices. For simplicity, you may decide to issue monthly invoices to your recurring clients on the 1st business day of the month. For other situations like one-off projects, only send the invoice per your agreement with the client.
- Is your invoice in agreement with your contract?
We focus on client contracts for a reason. Without a contract in place, it becomes much more challenging to manage your business. Assuming you have a reasonably detailed contract, that document should describe the invoice process, timing, and amounts. Before sending out your invoice, take a moment to verify that your invoice amount agrees with the client agreement.
- Does the invoice have any spelling or grammatical errors?
Minor errors in spelling or grammar on an invoice can confuse. That’s unfortunate because a confused client is less likely to pay the invoice promptly. Make sure your invoice number does not accidentally have unusual letters or characters.
If your invoice typically includes a three-digit invoice number (e.g., invoice number 100, 110, and so forth), check to see if your invoice conforms to this pattern.
- Is the invoice addressed to the correct address and contact person?
The final part of the invoice accuracy checklist is to confirm you are sending the invoice to the correct person and email address. You will most likely find this information when you onboard a new client. Simply ask them who you should send the invoice.
Ask for a contact name, phone number, and email address if possible. Getting those additional details means you can easily follow up about unpaid invoices if necessary.
6. Invoice Number Examples
There is no single right way to use an invoice number. Instead, choosing your approach is more critical and staying consistent. Here are some examples of how you can create invoices.
6.1. Simple Invoice Numbering: The Rule of 10
The simplest way to use invoice numbers is to choose a starting number like 100 and add 10 to it each time. The first invoice you send would be numbered 100, and the second invoice number would be 110. Simply continue adding 10 to the invoice number each time.
The “rule of 10” approach is ideal when your business is small or has a handful of clients. This approach works well even if you issue a dozen or more monthly invoices.
6.2. Different Invoice Numbers By Client
What if you have dozens of clients? You may find changing your invoice number method helpful in that situation. Consider setting a different invoice number per client to simplify your invoice monitoring. Let’s illustrate how this would work with an example. A business has nine recurring monthly clients, each receiving at least one invoice per month. Each client has different pricing and invoice requirements. Therefore, use a different invoice number to keep track of each one.
Client 1: Client 1 invoices start with 1 followed by 3 digits. For example: the January invoice to client 1 would be numbered 1001.
Client 2: Client 2 invoices start with 2 followed by 3 digits (i.e., the February invoice would be numbered as 2001).
6.3. Different Invoice Numbers By Project Type
In the example above, we assumed that the business mainly had recurring clients. If your business focuses on migrating clients to a cloud platform like Amazon Web Services, you might base your invoice on the project type. Here are examples:
A technology consultant quickly tracks her main service offerings using the following invoice numbers.
Project Type: Migrate to Amazon Web Services
AWS migration invoices start with 1.
Project Type: IT Security Audit
Security audit invoices start with 2.
Project Type: IT Project Management Services
Project management invoices start with 3.
7. Invoice Numbers Frequently Asked Questions
7.1. I’m just starting and want to keep things simple with invoice numbers. What should I do?
Use the rule of 10. Your first invoice will be numbered #100, and your next invoice will be numbered #110.
7.2. I accidentally sent an invoice to a client without an invoice number. How do I solve this problem?
Everybody makes mistakes sometimes. To solve this problem, send an email to your client. Tell them that the most recent invoice you sent was missing a number. You will cancel and send a corrected invoice with an invoice number to fix the problem. To minimize the chance of this problem happening again, use the invoice checklist provided in this guide.
7.3. What is the ideal number of invoices to send to clients per month?
While there is no simple answer to this question, we recommend the “less is more” philosophy. Imagine if your phone company sent you a separate invoice for every call you made! Keeping up with that many invoices would quickly become overwhelming. Generally speaking, it is best to send one invoice per month. If your specific contract or client requires more invoices, send them as needed.
8. Save Time On Invoice Management With CheckYa
Sending out invoices to clients should be simple and fast. When you use CheckYa, you’ll save plenty of time. For example, CheckYa lets you send automatic invoice payment reminders, which means you’ll get paid on time.
CheckYa also shows the payment status of each invoice so you can tell at a glance whether your invoices are getting paid. Click here to get started with CheckYa today!