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Invoice notes and terms example for IT

in this video we'll talk about creating and sending invoices its purposes and most important components hi this is eric ruiz i'm a cpa and accounting expert with fit small business let's get started an invoice is an important document in the order fulfillment cycle it serves as an evidence that a customer owes us a certain amount we should deliver the invoice as soon as possible so that customers will not forget to pay now let's talk about sending invoices there are three ways to send invoices first you can send it upon delivery of the goods or completion of the job this method is the best for infrequent customers or customers who don't purchase from you several times a week you can attach the invoice inside the parcel or packaging of the goods delivered for service providers you can send an email to the customer after you've completed the service second you can send a consolidated invoice at the end of the month if some customers order from you several times a week it would be very tedious to prepare an invoice every after delivery instead you may ask customers if they prefer receiving invoices in one go at the end of the month in this way you won't bother customers with a lot of paperwork and they will only process the invoice payment once lastly you can send a percentage of completion while this is common for construction companies sending invoices at percentage of completion helps your business get extra cash flow as a long-term contract or project is being performed for example you can invoice a client once completion rate is 25 so these are the three ways of sending invoices if you have other suggestions or ways let us know in the comments below now let's talk about the purposes of an invoice first an invoice is the demand for payment it means that we've completed the job or deliver the goods to the customer since we are demanding payment we are also recognizing a receivable in our books the second purpose would be for business promotions at the bottom of the invoice you can insert a short note or text about business promotions and special offers later on i'll show you how you can do this by looking at the sample invoice and lastly it can be used to dispute charges in case a customer finds the wrong item price quantity or description in the invoice they can call you to clarify about these items for payment hence always try to work with your customers and be professional when attending to their concerns now let's talk about invoice components there are nine fundamentals invoice components the invoice you're seeing right now is from quickbooks online quickbooks online is small business accounting software that lets you create send and manage invoices of customers sign up for a 30-day free trial or get 50 off for three months if you want to learn more about invoice designs take note of the link on the screen or check out the description box for more information now let's talk about company details your invoices should always include your name or your company's name state your business address and preferably your business email and phone number at the top of the invoice you may also add your logo and colors for branding the next component would be recipients information as with your own contact information you should likewise include all the same details of your recipient so be sure to include the name of your client's contact who handles your account another important thing to consider would be the invoice number and due dates device a unique numbering system for every customer in invoice this will help both you and the customer track the transactions however the invoice due date must be displayed prominently in the invoice so that your customers can see them easily aside from these two we also need to have the invoice term it is also critical to include in the invoice the payment term including the due date and late payment fees a solid paper trail helps you in sending follow-ups or overdue notices and charging interests if the client hasn't paid on time it'll also serve as a reminder to your customer of when they need to process the payment now let's move on to the mode of shipment you should specify the shipping carrier that will deliver the goods to your customer if you are a service provider there's no need for this field now let's talk about the sales representative field customers can refer to the sales representative in the invoice in case they have questions about the product or service you can also use this information to assess the performance of your sales representative moreover you should also include the method of payment be clear on how your customers should pay you specify if they can pay via check credit card or other methods like paypal for large projects come to an agreement for the payment method that you both like for foreign transfers ask for the account number all the required details and indicate who will shoulder the transfer charges if any now let's discuss the itemized list of services and costs people always want to know what they are paying for don't use general descriptions such as web design or red bag tell your client exactly what they have received from you and be as specific as possible include a breakdown of the goods or services that you have provided and what you charged and last but not least the notes section it's a good idea to add a message box to your invoice template you can note important account information mention seasonal promotion details or simply thank them for doing business with you and those are the components of an invoice there are many ways to design and present an invoice feel free to find a design that you like and resonates with your brand and before we part let's first tackle some of the frequently asked question first what is the difference between an invoice and receipt to keep it simple there is still no payment made after you send an invoice once customers pay that's the time you issue a receipt to signify that you have received the amount due either physically or electronically by a fan transfer second what is an invoice number it is a unique number generated and assigned to an invoice document you can use invoice numbers to organize all invoices and match them with customer payments third and last is an invoice just a bill in form and substance they're both one and same we only call it an invoice if we are the one sending it to the customers on the other hand we call it a bill when we're the one receiving it from suppliers or vendors and that's it for today's video thank you for watching and be sure to check out the article that accompanies this video please don't forget to subscribe to our youtube channel fit small business this has been eric see you next time