If you’re like most eCommerce business owners, you love getting paid, but you hate creating invoices. It can be a tedious, manual, and error-prone process that can directly impact your bottom line if not done correctly.
But thankfully, with the right tools and tips, it can be a breeze and keep your cash flow working in your favor.
In this blog post, we’ll show you how to create invoices for your eCommerce business and provide some helpful tips on making the process easier. So whether you’re just starting out or you’ve been in business for a while, read on to learn more!
What is an Invoice?
An invoice is a document that businesses send to their customers to request payment for goods or services.
It typically includes:
- the date of purchase
- the customer’s contact information
- a description of the goods or services provided
- the unit price
- the total amount due
Businesses usually send invoices after they have provided their products or services to their customers. This is especially true for eCommerce businesses.
In some businesses, such as coaching or public relations, the business may invoice their customers prior to the delivery of the service.
Customers then have a set period of time to pay the invoice, which is typically 30 days. If they do not pay within that timeframe, they may be charged interest or late fees. It’s also a good general room of thumb to pay invoices on time to keep positive relationships with your vendors.
Businesses use invoices to track what they are owed and follow up with customers who still need to pay. Customers use invoices to keep track of their expenses and ensure they are being charged the correct amount for the goods they receive.
When do you need to send an invoice?
When do you need to send an invoice? That’s a great question and one that eCommerce businesses should be asking themselves on a regular basis.
The answer depends on the situation as there is not one size fits all answer for every business.
If you’re selling physical goods online, like t-shirts or meditation crystals, you’ll need to send an invoice either as soon as your customer places the order or as soon as the goods have been shipped, depending on your business model.
For digital products, such as an online course to teach customers to buy commercial real estate or how to grow a dog grooming business, you can send the invoice immediately after the sale is made.
For services, such as business coaching, you should either send an invoice prior to starting work or as soon as the job is completed, depending on your preference.
Of course, there are always exceptions to the rule, so it’s important to use your best judgment in each individual case. But in general, these are the times when you’ll need to send an invoice.
How do you send an invoice?
Many business owners make the mistake of thinking that all invoices are created equal. In reality, there are a few key things that you should keep in mind when sending an invoice in order to maximize your chances of getting paid.
Be sure to send the invoice in a timely manner. If possible, aim to send it within 24 hours of providing the product or service. (Or making the deal if you invoice in advance.) The sooner you can get it into your customer’s hands, the better.
It is appropriate to send your invoices by snail mail or email; both have advantages and disadvantages.
Snail mail is obviously a lot slower, so you might get paid less quickly. On the other hand, while email is a lot faster, it can be easy for both you and your customer to delete or lose an email invoice. Another advantage of emailing invoices is that you can include a clickable payment link right in your invoice, which makes it easier for customers to pay you within minutes of receiving your invoice.
So which is the best option? It really depends on your business and your customers. If you need to get paid quickly, then email is the way to go. But if your customers are more old-school, then snail mail might be the way to go. Ultimately, it’s up to you to decide which option is best for your eCommerce business.
Finally, don’t be afraid to follow up. If you haven’t received a payment within a reasonable period of time, reach out to your customer and remind them that the bill is due. Some accounting software, such as Freshbooks, will actually take care of this step for you automatically if you choose – sending reminders at pre-specified intervals.
A gentle reminder can go a long way toward ensuring that you get paid in a timely manner. By following these simple tips, you can streamline the invoicing process and ensure that your eCommerce business stays afloat.
Essential Elements of an Invoice
Below, you’ll find the primary elements of every invoice.
Header
This might include some graphic detail or your logo for a professional look.
Conditions and payment instructions
This information tells the conditions under which payment must be made (on receipt, ten days, 30 days, etc.) as well as how to pay – such as clicking a payment link to pay by credit card or an address to mail payments to.
Company name and details
You’ll need to include your company name, mailing address, phone number, website, customer service email address, and, if you primarily sell services, potentially your business’s EIN.
Date
This should be the date of the order, the sale, or the date you’re sending the invoice.
Due date
Be sure to clearly state when payment is due on the invoice (On receipt, on April 14, etc.).
Itemized fees
In addition to listing charges for the individual items or packages, you’ll also need to itemize any additional charges, including tax, shipping fees, discounts, etc.
Name and details of the client
This one is pretty self-explanatory —- you’ll want to include your customer’s name, business name, address, email address, and phone number.
Description of goods or services provided
This might include a description such as “blue stripe boatneck shirt,” a SKU or other identifying number, or both. “889030392 blue stripe boatneck shirt” would be an applicable example.
Balance due
Finally, you’ll want to include how much your client or customer owes.
For example, you may allow your customers to try your Teach Your Pet 37 Hilarious Tricks course free for 30 days before committing to buy, or you may allow them to pay for the $300 in 3 installments of $100 each.
How to Create an Invoice: Step-by-Step
Creating an invoice can feel like a daunting task, but with these simple steps, you’ll be sure to have a professional document in no time.
- Clearly mark your invoice – be sure to add the word “invoice” at the top; otherwise, your client may confuse it for a packing slip.
- Add your company name and information. Include your due dates and payment terms — Is it net 30 (due in 30 days), due on receipt (as soon as the invoice is received), due in installments, or something else?
- Write a description of the goods or services you’re charging for. Include the total amount due – remember to add in itemized fees such as tax, shipping, and late fees.
- Make your invoice look professional. Try using a free Excel invoice template or one of the invoice templates offered by your accounting software.
How can I Create Invoices Using Excel Templates?
Excel templates can be a great way to create professional-looking invoices quickly and easily. Here are a few tips for getting the most out of Excel templates:
First, make sure you have all the necessary information at hand before you start filling out the template. This includes your eCommerce platform details (such as your shop name, address, and contact information), as well as the customer’s name, address, and contact information. You’ll also need to include the invoice date, the order details, and the total amount due.
Once you have all the necessary information, take a look at the various free Excel templates available online. There are a wide variety of styles to choose from, so select one that matches your eCommerce brand. If you need help with how to use Excel, there are plenty of tutorials available online that can walk you through the process step-by-step.
Once you’ve selected a template, it’s simply a matter of filling in the blanks.
Enter your eCommerce shop information into the appropriate fields, then fill in the customer’s name, address, and contact information.
Finally, add in the invoice date, order details, and total amount due.
Once you’ve filled out all the fields, your invoice is ready to be saved and sent!
Should I Use an Accounting Software for Managing My Invoices?
If you’re tired of cobbling together your invoices, or your customer base is large enough that you are concerned some payments or invoices may be falling through the cracks, accounting software such as Freshbooks, Quickbooks Online, or ZOHO Books can make life easier by:
- Helping you track both your invoices and expenses
- Letting you know if or when customer invoices are overdue
- Allowing you to split invoices into multiple payments
- Integrating easily with a variety of payment processors such as PayPal or Square and offering a number of instant payment options, including ACH (bank transfer), credit card, etc.
These software options range from free to $30 per month with additional tiers, depending on the number of clients or customers you have and the particular bells and whistles you’re looking for. Many accounting software solutions also integrate with other software to seamlessly send financial information back and forth. If you are building out your business tech stack, be sure to see how they all connect together.
Final Thoughts
As an eCommerce business, you’re likely to be sending invoices on a regular basis.
By understanding the basics of creating and issuing invoices, you can streamline this process and ensure that your customers always have a clear record of what they owe you with tips and tricks by SKU Vault.
Looking to kick start your eCommerce invoicing processes? See our guide on the best accounting software for small businesses.
