What Is an Invoice Number?

Invoices are most commonly sent as a document (Microsoft Word or Google Docs), a spreadsheet, a PDF, or via specialized invoicing software. Whichever way you go, use a template and lock in details like your business name, bank details and payment terms so you don’t have to keep rewriting them on every invoice. Project codes can help you sort your invoices aptly if you work on several projects.

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. 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. Invoice numbers are one of the most efficient methods for payment processing and payment tracking purposes and commitments made and still to be made. They also guarantee that you are not repeatedly requesting payments from clients, which may be confusing and difficult to reverse.

Do I need an invoice number?

It will be easy to know how much you have earned so you can calculate the tax you owe quickly. Even if you use the best accounting software, you can still have difficulties filing your taxes if you cannot track invoices. While some of the problems that lead to late and unpaid invoices are beyond your control, there are some that you can easily solve yourself, such as ensuring proper invoice numbering.

• At that point, you can easily reference any invoice numbers when you reach out to the client to check on payment status.
• Alternatively, you can run a tool the duplicate invoice numbers and trace the errors.
• However, it is a common practice for businesses to use them interchangeably.
• Jason holds a BBA from Simon Fraser University and is a designated CPA.

Still, most customers tend to request them to be present on the invoices, as reference numbers ensure transparency and serve to confirm your professionalism. The more organized your company and its invoicing system, the more legitimized and professional you are in the eyes of your clients. Invoice numbers are one of the most important aspects of invoicing as they ensure that income is properly documented for tax and accounting purposes.

Don’ts

The number of digits in an invoice number can vary depending on the issuer and the purpose of the invoice. Some invoice numbers may be as short as four or five digits, while others may be much longer, with ten or more digits. In general, it is up to the issuer to determine the length and format of the invoice number. If an accountant or tax specialist is consulted, an effective numbering method can significantly help and show professionalism in how a business operates. Tax time is a stressful time for all businesses, so a major goal is to make all operational processes as effective and efficient as possible.

If all your invoices are to be identified by ‘job name,’ it may cause confusion as to which invoices are paid, which remain unpaid, and how much is yet to be paid. Then, sorting this out can be taxing because all invoices have identical job names. It takes a lot of effort to keep track of all the different projects and multiple clients throughout the year to know how many clients you billed and how much money you made. Because invoice numbers are consecutive, you can see how many future invoices you sent out throughout a certain period. It is crucial for your accountant and the duration of tax season.

Organize invoices for easy access

New businesses may not have high numbers of invoices to begin with, but it’s important to consider future growth when choosing an effective invoice numbering system. An invoice is a bill that includes a list of products or services provided to a client for payment. Sellers or vendors issue invoices toward the end of transactions after the product is delivered or the service is provided. QuickBooks automatically assigns simple and intuitive invoice numbers, making your payment history easy to search.

• For example, some companies can’t process an invoice without an invoice number – causing a delay to your payment.
• If you use sequential invoice numbering, it will be easy to determine how many clients you have invoiced and how many clients remain.
• In the examples that follow we show the tax invoice but we’ll also send a non-tax invoice to use if you’re not registered for sales tax.
• There could be tax or legal consequences from switching your invoice numbering system around, so you’ll want to assign invoice numbers with that in mind.
• Even if your clients do not require an invoice number, it is still wise to use an invoice number.

Xero does not provide accounting, tax, business or legal advice. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided. Always provide a description of the goods or services supplied so the customer knows what they’re paying for. You want your invoices to be concise, but with enough detail that your customer doesn’t have to ask questions. In the examples that follow we show the tax invoice but we’ll also send a non-tax invoice to use if you’re not registered for sales tax.

Does an Invoice need to have a Number?

Even if it’s not a legal requirement, an invoice number is considered a business best practice. It’s a detailed technique of invoice numbering in which you can include the date of the invoice issued. The date is used as a prefix, followed by customer ID or customer name short form and in between special characters are included for more clarity. Whether you are using sequential invoice numbers or any other invoice numbering system, it will be easier to track payments via the invoice numbers.

To minimize the chance of this problem happening again, use the invoice checklist provided in this guide. Instead, choosing your approach is more critical and staying consistent. 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.

What Is an Invoice?

A technology consultant quickly tracks her main service offerings using the following invoice numbers. 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. Even if your clients do not require an invoice number, it is still wise to use an invoice number.

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. Failing to charge tax amounts (e.g., What is an invoice number 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. Sending an incorrect invoice is one of the fastest ways to look foolish in front of clients.

Assigning invoice numbers to each invoice helps your business run effectively and smoothly. Using a unique numbering system can be a simple way to organize invoices for tax and accounting purposes. An invoice number is a unique identifier assigned to each invoice issued by a business or person. More importantly, invoice numbers enable you to quickly check which invoices haven’t been paid yet.

In writing, both parties agree that payment will go to the new invoice number. For very strict institutions, such as banks, you’ll want to refund the money, cancel the duplicate invoice, and re-issue it properly. If you’re just starting out using invoices to bill clients, here are a few simple tricks you can use to ensure that your invoices are well-organized and easily searchable. An invoice is generally used to document products or services sold and delivered to a customer, so it is a bill. Since the advent of the computer era, people and businesses have found it easier to rely on electronic invoicing as an alternative to paper documents.

An invoice number and a receipt number are two different things. An invoice number is a unique identifier assigned to a bill or invoice issued by a business. It is typically used to keep track of and manage the payment of invoices and can be used by both the issuer and recipient to reference the invoice in future communications. A receipt number, on the other hand, is a unique identifier assigned to a receipt for goods or services that have been purchased. In this case, the reference number starts with the client number. After, you should add the issuance date (optionally) and the sequence number at the end.

This information should be maintained on hand during any accounting period in case there are any inaccuracies or duplicate invoice numbers in future encounters. An invoice number is one such metric for an individual invoice, and it is an important detail to be added to an invoice. Getting this number right assigned to each invoice is of key importance for small business owners. This blog will go through the most fundamental invoice reference and details. These days, invoicing and accounting software can do the hard work for you by automatically generating unique invoice numbers. A complex configuration combines alphanumerical characters that make up an invoice number.

Otherwise, there are best practices and general business norms, but ultimately it is up to your business which numbering system you choose. A numbering system designed for a handful of clients won’t work as well when your customer base expands. Invoice numbers make reviewing invoices and accounts generally a lot simpler. Failing to accurately keep track of invoices is particularly important when it comes to overdue invoices. If you have multiple projects with a customer, you can be even more thorough and allocate a project number.

The number can be anything, as long as it is easy to read, understand and track. Chronological invoice numbering is convenient as every project has a start date, which means you can easily look up where you are in the invoicing sequence. However, as you take up multiple projects, they often become scattered where one starts before the other finishes. Hence numbering the invoice by date might not always arrange projects perfectly in your books.