What is a Sales Invoice? Understand Invoicing for Small Businesses

An invoice is sometimes referred to as a sales invoice. It is a document sent by a product/service provider. It informs the purchaser to pay, hence creating an account receivable. An invoice is the written verification between the buyer and seller of goods and services.

Invoices are crucial in bookkeeping and accounting as they record all transactions.

What is included in an invoice?


  • The date – when the invoice was created. It helps when you have a time limit for the payment. Customers will know when the payment is due.
  • Names and address – of supplier and customer. If you use invoice software, you only need the customer‘s email. In case you send a real letter, collect the actual address.
  • Contact names – names of the business or individuals you are dealing with. Spell names correctly.
  • Description of purchased items – include the prices and quantities of products or services delivered. Be very specific and detailed as possible.
  • Terms of payment – ensure you specify the amount and timespan to pay, e.g., within 30 days.

How to invoice a customer


You can use recurring billing software like Probill or a pre-printed invoice, which you will complete. The process is the same for both procedures. You only prepare an invoice after you have delivered/shipped products/services to the customer.

  • Identify the customer – also, you might want to identify the sub-customer/job in the customer‘s file.
  • Include previous document numbers that are related to this sale i.e., sales agreement and purchase order.
  • Identify items sold and delivered. Include the name of product, quantity, rate (per item per hour) use back-ordered in case you use online software.
  • Place each item in its line, and totals must be visible.
  • Include deposits and discounts applied to the invoice for the customer.
  • Offer your customers a different method of payment e.g., cash.
  • Include terms of products to be shipped. Use Free on Board (FOB), where the seller pays for the shipping. Use the FOB destination for the buyer to pay for the shipping. Also, note if customers pick the item(s) and know if they need to answer any questions before that.
  • Terms of sale. Use it when you want buyers to pay and give them a discount for early payment. You can use 2/10Net/30. It translates to 2% discounts for payments received within 10 days.

You can send invoices via email or fax to customers.

Once a customer pays, note the invoice number on the sales receipt to match it on the one on your accounting software. That’s how you ensure the invoice has been paid. Your payments will take huge amounts of accounts receivable.

Difference between an invoices vs. purchase orders

purchase order

Don’t confuse invoices with purchase orders (POs). POs are used before a transaction and invoices after a transaction. POs record orders made by customers to sellers. Invoices include receipt of the products/services and terms of payment. Many companies use purchase orders for the approval process. Some companies will ask for purchase orders for products/services over a specific amount.

Difference between an invoices vs. bills


An invoice and a bill differ at the focus and standpoint. Suppliers create the invoice stating products/services delivered to customers and the amount owed. You can create an invoice before or after products/services are received. Invoices can be sent along with the goods for buyers to confirm all items are there upon arrival.

A bill is a payment request. It comes from the customer‘s standpoint. Bills come with expectations of immediate payment.