What is a Sales Invoice and How to Create One

Tuesday, January 10, 2023

A sales invoice or commercial invoice is a document that requests payment for goods or services provided to a customer. It is an essential part of the invoicing process, as it outlines the payment terms and helps ensure you get paid for your work.

This article will provide an overview of a sales invoice and its importance, how to create one, and a bonus tip on requesting a payment. 

We will also discuss the key elements that should be included in a sales invoice and provide the best practices for creating and sending sales invoices.

What is a Sales Invoice?

Sales Invoice Calculation

A sales invoice is a document that asks for payment for goods or services provided to a customer.

Due to the uncertainty of what information to include, writing an invoice is challenging if it’s the first time you are doing it.

A sales invoice typically includes information about what was provided, the cost, and the payment terms. It is issued after the goods or services have been delivered.

But in some cases, the invoice is issued even before. This happens when a sales agreement specifies the payment to be made in advance. 

Sales invoices are used in many industries and are an important part of invoicing since they help process business transactions.

Sales invoices help set clear payment terms and ensure businesses receive payment for their work.

Why are Sales Invoices important?

Sales invoices are a vital part of running a successful business to account for expenses and end up with a profit.

It is also important to keep track of the invoices issued and the payment status of each invoice. This way, a business can better understand its overall sales performance and cash flow. This can help them to make more informed business decisions and plan for the future.

Despite the benefits that sales invoices provide to a business in terms of future planning, it also helps manage accounting documents.

Accounting Workflow

Invoices are a crucial part of maintaining organized and accurate financial records. They provide a clear record of each sale and transaction, which can be used to update an accounting document, such as a financial statement that tracks income and expenses.

Invoices are also important when it comes to tax time. When you file your taxes, you must report your income and expenses. Having a clear record of your invoices lets you quickly reference the income and expenses you need to report on your tax return.

Inventory Management

In case when a business sells physical products, issuing sales invoices is equally important in managing inventory.

Every time you sell something, you will know how much inventory is still available, giving you an overview of accurate data.

Such information also helps your marketing by determining the best time to promote a product based on its selling behavior.

How to Create a Professional Sales Invoice

By following a few simple steps, you can create a professional invoice that meets the needs of both your business and your clients.

In this section, we’ll outline the process of creating a professional sales invoice, including selecting a template, adding necessary information, and finalizing the invoice for submission. You can easily create a professional and effective sales invoice by following these steps.

Use Portant’s Free Sales Invoice Template

Portant's Free Sales Invoice Template

With Portant’s free sales invoice template, you can quickly and easily create customized invoices that accurately reflect your brand and the goods or services you have provided to your customers.

The template includes all of the important details that should be included in a sales invoice. Using Portant's sales invoice template, you can streamline your invoicing process, ensure that you accurately and professionally request payment, and increase the likelihood that your customer pays you.

1. Start with Your Business Details

To ensure that your invoice is professional and effective, it’s important to include your business details on your sales invoice. This includes your company name, address, phone number, and email.

Additionally, including your business logo in your sales invoice can help make it easy for clients to identify the invoice as coming from you.

A business logo is a visual representation of your company, giving your invoices a professional and cohesive appearance. It also makes your sales invoices more memorable and distinguishable, particularly if you have many clients or invoices.

2. Add the Customer’s Contact Information

Including the customer’s contact information on your sales invoice helps establish a clear communication point and ensure that the invoice is delivered to the correct person. This information should include the customer’s name, company name (if applicable), address, phone number, and email.

Example of Customer Information in an Sales Invoice

By including the customer’s contact information on your invoice, you can easily communicate with your clients and address any questions or issues that may arise.

Double-checking that the contact information is accurate and up-to-date before sending the invoice can prevent delays or misunderstandings.

3. Add an Invoice Number

Example of an Invoice Number in a Sales Invoice

As a business owner, including an invoice number on your sales invoices, is crucial in boosting your sales process in your day-to-day business operations. This unique identifier allows you to refer back to a specific purchase order easily and helps ensure clarity when referring to a sales invoice.

It also demonstrates to your clients that you are serious about your business and pay attention to detail. Don’t neglect this important step in your invoicing process – include an invoice number on all your sales invoices.

4. Write in Your Goods or Services

Goods or Services In an Sales Invoice Example

Writing your goods or services clearly and accurately is crucial to creating a professional sales invoice. This helps establish the full scope of the work completed and ensures that you are properly compensated for all the products or services provided.

To write the goods or services in your sales invoice, start by describing each item or service, including relevant details such as quantity or duration.

Including any codes or abbreviations commonly used in your industry may also be helpful.

In addition to the description, include the cost of each item or service, including any applicable taxes or fees. Clearly state the total cost to make sure everything is clear.

5. Include the Payment Terms

Including the payment terms in your sales invoice is essential in establishing payment expectations with your clients.

Example of Adding Payment Terms to a Sales Invoice

By specifying the payment due date, late payment fees, and accepted payment method, you can help to protect your rights as a business owner and ensure that your invoicing process runs smoothly. This could include cash, check, credit card, or electronic transfer options.

6. Assign a Customer Code to Your Sales Invoice

Customer Code in a Sales Invoice Example

Including a customer code on your sales invoice can be helpful in terms of record-keeping by differentiating client from client and tax compliance.

By assigning a unique identifier to each client, you can easily track purchase orders from goods or services provided to each client and ensure that you have all of the necessary documentation for tax purposes.

It can also help ensure clarity and consistency when reconciling invoices and tracking payments.

7. Add an Invoice date

Adding an invoice date in your sales invoice helps to establish the timeline of the work that has been completed and when payment is due, which is essential in ensuring that you receive payment promptly.

The top of the document is the most common place to include an invoice date. 

Example of an Invoice Date in a Sales Invoice

It is crucial to ensure that the invoice date is accurate and up-to-date to avoid delays or misunderstandings.

In addition, it helps in deciding when to follow up with your clients regarding late payments.

By adding an invoice date to your sales invoices, you can improve the organization and workflow of your selling process and accounting department.

8. Calculate the Amount and Sales Tax

It is important to include the amount and sales tax in your commercial invoices to accurately reflect the total cost of the goods or services that you have provided to your client.

The amount should include the unit price of each item or services rendered as well as any applicable taxes or fees.

The sales tax is a percentage of the amount the government collects and is typically based on the location of the sale.

To calculate the amount and tax, you will need to determine the cost of each item or service and the applicable sales tax rate. You can then add the amount and the sales tax to calculate the total amount due, which should be clearly stated on your invoice.

How to Request Payment with Your Sales Invoice Using Portant

Portant's automation features make requesting payments a breeze. Using the free sales invoice template shared with you at the beginning, you can easily create professional and effective invoices that clearly outline all the things one must include in their sales invoice.

But there's more - with Portant's automation features, you can eliminate the hassle of requesting payments altogether. The app allows you to send bulk payment reminders and notifications to be sent to your clients. This means that you can sit back and let Portant handle the nitty-gritty details of requesting payment, freeing you up to focus on running your business.

Portant's automation features also allow you to set up recurring invoices for clients to who you provide common goods or services. This means you can set it up once and forget it, knowing that you will be paid consistently without lifting a finger.

James the founder of the app, walks you through the whole process in a few minutes in the following video:

If you want to take advantage of Portant's automation features, click here and start sending invoices in minutes.

FAQs

Q. Is a sales invoice a receipt?

A. A sales invoice serves to request payment, whereas a receipt is payment proof of a sold product.

Q. Who can issue a sales invoice?

A. Issuing sales invoices is not limited to an accounting team. Anyone that sold a product or a specific service to someone else can freely issue an invoice.

Q. Is a sales invoice an expense?

A. Sales invoices show as profit in your accounting balance sheet. 

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