Invoicing can significantly impact client satisfaction.
From the client’s point of view, it is very important to receive an invoice that is clear, transparent, and follows the services they’ve agreed upon.
The key elements of an invoice are the technical elements, the accounting elements, and the appendix.
The appendix can especially increase the transparency of your work.
The Accounting Elements of the Invoice
Each invoice should contain a list of activities you’ve done for the client, the quantity (i.e. the number of work hours), the price, and the total sum you’re charging.
Additionally, this includes the tax part – sales tax or VAT – as well as the part that was paid in advance.
When it comes to invoicing services, there are mainly two service types:
- Services with an agreed flat fee
- Services with an agreed hourly rate
The services that are billed by the hour can sometimes be debatable for the client. hence, it is important to transparently show exactly what has been done and the hours spent on it.
It turned out the best practice was that the invoice itself states the project, as well as the number of hours. The appendix, on the other hand, should contain a list of work tasks that were performed with a specification of the work hours.
Here is an example of the accounting part of the invoice that charges per working hour.
The invoice must be accurate and transparent.
How to Ensure the Accuracy of the Invoice?
When it comes to services billed by the hour, a simple and reliable billable time tracking system is necessary. All employees should be able to enter hours on pre-defined tasks for a specific client.
Most of these systems have a billable rates feature. Thus, the contractors can enter their own billable rates for higher accuracy.
Detailed reports for each client can then be extracted from the system. They show work tasks, hours, and rates, so that the accountable person can review all tasks for more accurate invoicing. This is an important step, as you can see all the tasks that were done for the client here. Hence, missing billable hours are impossible.
Additionally, these reports can be used as an appendix to the invoices.
If you’re invoicing a flat fee, a standardized list of services is necessary. You also must match the list of services on the invoice to what is written in the client’s contract.
How to Ensure Transparency?
In order to achieve complete transparency and client satisfaction, it is always good for the invoice to have an appendix, which will contain the details of each service listed in the invoice.
Include Technical Elements
Here you should enter the name of the invoicing company, its address, contact information, email, and tax ID.
The next item on your service invoice should be the client details. These include the client’s name and contact details. That is to say – name, business address, phone number, and email
Entering the client’s contact information ensures that the invoice ends up in the right hands.
All invoices you issue should also include a clearly listed invoice number. Each invoice number should be unique, as it represents a reference to the client. If you ever need to review an invoice with a client. Additionally, the invoice numbers will make your bookkeeping process easier. It is up to you to decide the format of the invoice number, as it can consist of letters, numbers, or a combination.
Dates in the Invoice
When billing, these two dates are the most important:
- Invoice publication date
- Due date
The invoice publication date is usually the date when the service was completed. The end date of service represents the day when the service was sent and confirmed by the client.
You need to be careful not to make a mistake if the invoice includes VAT or sales tax. Namely, if the service was performed in January and the invoice was issued in March, the tax authorities can ask you to pay the VAT in January.
The Due Date
The due date is important because you’ll be able to track customer billing.
This is where you should show payment methods and payment details.
The best course of action is to include as many payment options as your business allows, as the clients will be glad to see you are giving them some flexibility. Some of the options you should think about are online payments, cash, credit card, check, bank deposits, etc.
A payment link can also be beneficial, and you should consider including one.
The invoice’s appearance is very important for company branding. You should include the company logo and an adequate design to the invoice.
The positioning of the payment details is important, and this element should be highly visible.
The appendix can contain service details, including:
- A list of the employees who were involved in the project and their working hours
- A list of completed projects and hours per project
- A detailed list of all work tasks performed for the client, including the hours worked on each task
We are giving you an example of an appendix to the abovementioned accounting part:
You can download an invoice model with the appendix in Excel here.
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