How to create an invoice the right way

An invoice is a formal document that a seller sends to a buyer requesting payment for goods or services provided. It lists the items or services delivered, their quantities, prices, and the total amount due.

This document serves multiple purposes in business operations. First, it acts as a legal record of a transaction between two parties. If disputes arise about what was delivered or what was agreed upon, the invoice provides written evidence of the original terms. Second, it forms the foundation of a company's accounts receivable tracking. Every unpaid invoice represents money that should flow into the business. Third, invoices create the paper trail necessary for tax reporting and financial audits. Both the seller and buyer use these documents to substantiate their income and expenses.

Without proper invoices, businesses operate in financial darkness. They cannot accurately track what money is owed to them, making cash flow forecasting nearly impossible. They lack documentation for tax deductions on business expenses. Perhaps most importantly, they have no formal mechanism to request payment from clients, leading to confusion about amounts owed and payment deadlines. An invoice transforms a handshake agreement into a documented obligation.

Every invoice needs specific information to function as both a payment request and a legal document. Missing even one element can delay payment or create confusion about what is owed.

Header with business information

Your company name, address, phone number, email, and logo should appear at the top of every invoice. This immediately identifies who is requesting payment and provides contact information if questions arise.

Client information

Include the name and billing address of the customer or company being billed. For business clients, verify you are addressing the invoice to the correct department or person responsible for payment processing.

Invoice number and date

Assign each invoice a unique number, typically in sequential order, for invoice tracking purposes. Include the date the invoice was issued. The invoice number allows both parties to reference specific transactions, while the date establishes when payment terms begin.

Description of goods or services

Create an itemized list of what you are billing. For each line item, include a clear description, quantity, unit price, and line total. Clarity here prevents disputes. The client should immediately recognize what they are paying for without needing clarification.

Subtotal and total amount due

Calculate the subtotal by adding all line items. Then add applicable taxes or fees and subtract any discounts or prepayments to reach the final amount due. Mark this total prominently so the client cannot miss it.

Payment terms

State when payment is due, such as “Net 30 days” or a specific calendar date. List acceptable payment methods, including bank transfer details, mailing addresses for checks, or online payment links. If you charge late payment penalties or offer early payment discounts, specify these terms clearly.

Optional details

Consider adding a notes section for special instructions, thank you messages, or warranty information. Include tax identification numbers like VAT or EIN if required by law or for international transactions. Some businesses add purchase order numbers or project references to help clients match invoices with their internal records.

Including all these components creates a professional document that stands up to scrutiny. Missing information, particularly invoice numbers or due dates, almost always leads to payment delays.

A legally valid invoice documents the essential details of a transaction. It must identify who is buying and selling, what was sold, when the transaction occurred, and the amount owed.

In practice, every invoice needs specific elements to function as an official record. The document should be clearly labeled as an invoice. It must include your business name and address along with the customer's name and address. Each invoice requires a unique invoice number and the date it was issued. The goods or services sold need clear descriptions with quantities and prices listed. The total amount due must appear prominently, including any applicable taxes calculated separately.

These elements transform a simple payment request into a document that stands up to scrutiny for bookkeeping, tax reporting, and potential legal disputes. Missing any of these components can invalidate the invoice as an official business record, potentially causing problems during audits, delaying invoice processing, or when pursuing unpaid debts through legal channels.

Creating an invoice follows a straightforward sequence. Each step builds on the previous one to produce a complete payment request.

1. Choose a method or template

Decide whether to use a Word or Excel template, accounting software, or an online invoicing tool. Templates ensure you include all necessary fields. Many word processors and accounting programs offer free invoice templates to get started.

2. Fill in your business details

Insert your company name, logo, address, and contact information at the top of the invoice. This creates a professional letterhead appearance and establishes your brand while providing return contact information.

3. Add customer information

Include the name and billing address of your customer or client. Double-check spelling and verify you are addressing the correct entity, especially when invoicing businesses with specific accounts payable departments.

4. Assign invoice number and date

Generate a new invoice number following your numbering system and include the date. These details allow you to track and reference the invoice later.

5. List products or services provided

Create an itemized list with a clear description, quantity, unit price, and line total for each item. Descriptions should be brief but detailed enough for the client to recognize each charge.

6. Calculate totals

Tally up the line items to get a subtotal. Add any taxes or fees, subtract prepayments or discounts, and calculate the final total amount due. Make this total prominent through bold text or highlighting.

7. Specify payment terms

State when payment is due, such as "Payment due within 30 days of invoice date" or list a specific date. Include accepted payment methods with bank transfer details, mailing addresses for checks, or online payment links. Mention any late fee policy for overdue payments.

8. Include notes or special instructions

Add a brief thank-you note or relevant project reference, such as “Project Phase 1 Deliverables,” in a notes section. This personalizes the invoice and can reinforce key payment details.

9. Review and send

Check all figures, dates, and spelling for accuracy. Send the invoice electronically as a PDF via email or through an invoicing system. PDFs preserve formatting and look professional. Many invoicing programs can send directly to the client's email and track when the invoice is opened.

Accuracy at each step prevents disputes and payment delays. After completing these nine steps, you will have a professional invoice ready to generate payment for your business.

Getting paid quickly requires more than just sending accurate invoices. The timing, presentation, and follow-up process all influence how fast clients pay.

Send invoices promptly

Issue invoices as soon as you complete a sale or reach a project milestone. If you finish work today, send the invoice today rather than waiting until the month-end. Prompt invoicing keeps cash flowing steadily into your business and reduces the chance clients will forget about the work you performed.

Clearly define payment terms

Every invoice should explicitly state when payment is due, whether that means 30 days from the invoice date or a specific calendar date. Depending on industry norms, some businesses negotiate shorter payment windows, such as 7 or 14 days, to improve cash flow. If you charge late fees or offer early payment discounts, spell out these terms on every invoice to prevent misunderstandings.

Maintain a professional tone and format

Use a consistent template with your company branding, including your logo and standard fonts. Keep the layout clean and uncluttered. Double-check all spelling and mathematical calculations. A polished invoice reinforces your company's credibility and can serve as a subtle marketing tool when you include a note about new services or a simple thank you.

Keep records and follow up

Save copies of all invoices and track their payment status. Perform regular invoice reconciliation to match payments received against outstanding invoices, ensuring no payments are missed or misapplied. Many invoicing tools automatically log sent invoices and mark them when paid. When an invoice approaches or passes its due date, send a polite reminder email. Professional persistence reduces payment delays. Contact clients as soon as an invoice becomes overdue rather than letting weeks pass without communication.

Use technology to your advantage

Invoicing software and integrated financial tools can automate many of these practices. Set up automatic payment reminders for overdue invoices. Create recurring invoices for repeat clients. Let the software handle calculations to reduce human error. Even small businesses can access affordable or free invoicing software that streamlines the entire billing process and saves hours of administrative work each month.

Businesses should keep invoices for at least three years to meet standard IRS recordkeeping requirements. The agency requires companies to maintain supporting financial documents, including sales invoices, for this minimum period.

Many companies extend retention to seven years to protect against longer audit windows. The IRS can examine returns going back further than three years in certain circumstances, such as when substantial income is unreported. A seven-year retention policy provides coverage for these extended review periods while requiring minimal effort given today's digital storage capabilities.

Electronic storage makes longer retention periods practical. Digital invoices take up negligible space and can be backed up automatically. This approach provides protection against audits and helps resolve payment disputes that may surface years after the original transaction. The small cost of digital storage outweighs the risk of not having documentation when the IRS or a client raises questions about past transactions.

Digital invoicing has replaced paper-based systems for most businesses, bringing speed and accuracy improvements that directly impact cash flow.

Efficiency gains

Traditional invoicing through Word documents or Excel spreadsheets followed by postal mail takes time and invites errors. Automated invoicing software automates formatting, calculations, and delivery. Businesses input invoice details once, and the software handles the rest. Invoices reach clients instantly via email rather than days later through postal mail, accelerating the entire payment cycle.

Real-time tracking

Modern invoice automation software shows when clients view invoices and can flag overdue payments automatically. Instead of checking business bank accounts daily or calling clients to confirm receipt, businesses receive notifications about invoice status changes. This visibility allows for direct follow-up with clients who have opened but not paid invoices, rather than blanket reminders to everyone.

Reduced errors and paperwork

Software eliminates calculation mistakes and lost paperwork. Digital storage means invoices can be searched, sorted, and exported instantly. For finance teams preparing reports or facing audits, having all invoices in one searchable database saves days of work compared to filing cabinets full of paper documents.

Invoicing mistakes delay payments and create accounting problems that compound over time. These errors range from missing information to calculation mistakes that confuse clients and slow cash flow.

Inconsistent invoice numbering

Using random or duplicate invoice numbers makes tracking payments nearly impossible. Without a sequential numbering system, businesses cannot determine which invoices are outstanding or match payments to specific transactions. This confusion grows worse during tax season when accountants need organized records.

Missing key details

Leaving out a due date means clients decide when to pay. Forgetting contact information leaves them unable to ask questions about charges. Missing tax identification numbers can invalidate invoices for international transactions or tax deduction purposes. Each absent detail creates another reason for payment delay.

Miscalculating taxes or totals

Mathematical errors in tax calculations or line-item totals undermine your credibility and force time-consuming corrections. Even small mistakes require issuing amended invoices, apologizing to clients, and potentially adjusting multiple accounting entries. Automated invoicing software eliminates most calculation errors, but businesses using manual systems must verify every number.

Brex invoicing is built directly into its business banking platform, eliminating the need for separate billing software. This integration particularly benefits startups that want to consolidate their financial tools, but it also helps you get paid faster.

Integrated invoicing in banking platform

Customers handle banking and invoicing through a single Brex account interface. No additional logins, no data transfers between systems, no reconciling records across platforms. For startup teams managing multiple priorities, this consolidation removes administrative friction from the billing process.

Faster payments

Connecting invoicing to your business banking accounts accelerates payment processing. Money moves directly into your Brex account without third-party delays. According to Brex, companies receive payments 1 to 3 days faster than traditional invoicing methods. When both parties use Brex, payments process almost instantly through internal transfers. Given that roughly 1 in 3 US startups uses Brex, many companies can benefit from this same-platform speed advantage.

Automatic reconciliation

Brex automatically matches incoming payments to their corresponding invoices. Brex can also perform invoice matching between purchase orders, delivery receipts, and supplier invoices to verify accuracy before payment. When a client pays, the system updates the invoice status without manual intervention. Finance teams avoid the tedious work of matching bank deposits to outstanding invoices, reducing errors and keeping books current without extra effort.

Automated workflows

The platform automatically sends payment reminder emails to clients and generates recurring invoices for subscription services or retainers. Invoice statuses update in real time, showing sent, viewed, and paid stages. Late payment reminders go out without anyone manually tracking due dates. Monthly or quarterly billing runs itself once configured.

Unified view of cash flow

Brex displays invoices alongside bank balances and bills payable in one dashboard. This complete picture of money coming in and going out helps with forecasting and decision-making. Rather than exporting data from separate invoicing and banking systems, finance teams see their full cash position immediately.

Security and professionalism

Invoices sent through Brex include secure payment links and can display company branding for consistency. The platform supports same-day ACH and wire payments directly through the invoice interface. Making payment convenient for clients typically results in faster collection of outstanding amounts.

It’s easy

Creating your first invoice in Brex takes only a few seconds:

1. Log into your Brex dashboard
2. Navigate to the accounts tab
3. Create your first invoice

Creating and sending proper invoices determines how quickly your business gets paid. Including all essential information, from clear line items to explicit payment terms, reduces confusion and accelerates payment. Following best practices, such as sending invoices immediately after completing work and following up on overdue payments, keeps cash flowing into your business.

Modern invoicing tools have transformed what was once tedious paperwork into an automated process. Digital platforms eliminate calculation errors, provide real-time tracking of payment status, and send automatic reminders for overdue accounts. These improvements directly impact cash flow by shortening the time between sending an invoice and receiving payment.

Brex elevates invoicing by integrating it with its startup banking, corporate card, spend management software, and bill pay features in one platform. Rather than juggling separate systems for different financial tasks, businesses see their complete cash picture in one dashboard. Money from paid invoices sits alongside corporate card transactions and pending bills, giving finance teams immediate visibility into their working capital. Companies using Brex report getting paid up to 3 days faster, all while spending less time on reconciliation and manual follow-ups.

For companies that need every advantage in managing cash flow, sign up for Brex to turn invoice management from an administrative burden into a competitive advantage.