How to Make An Invoice
Updated by Xtensio
An invoice is used to document sales transactions. It includes a list of products, services, due dates, quantities, and related pricing information. A billing statement is a powerful communication tool to ensure timely payment, make a final good impression on clients and set the stage for long-term business relationships. Explore this template.
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Table of Contents
What Every Professional Invoice Must Include
A complete invoice contains eight essential elements: your business name, logo, and contact information; the client’s name and billing address; a unique invoice number for tracking; the invoice date and payment due date; an itemized list of services or products with quantities and unit prices; the subtotal, any taxes or discounts, and the total amount due; accepted payment methods and bank details; and your payment terms.
The invoice number system matters more than you might think. Use a consistent format — many freelancers use the pattern YYYY-001, YYYY-002 — so invoices sort chronologically and are easy to reference in conversations. Never duplicate an invoice number; it creates accounting confusion for both parties.
Include a brief description for each line item that matches the language in your contract or proposal. If the client’s finance team sees unfamiliar descriptions, they may delay payment while seeking internal approval. Consistent terminology between your proposal, contract, and invoice reduces friction.
State your payment terms clearly and prominently. ‘Net 30’ means payment is due within 30 days of the invoice date. ‘Due on receipt’ means you expect immediate payment. Whatever terms you choose, put them in writing before the work begins and repeat them on every invoice.
Invoice vs Quote vs Receipt vs Purchase Order
These four documents serve different stages of a transaction. A quote (or estimate) comes first — it tells the client what the work will cost before they commit. A purchase order is the client’s formal approval to proceed at the quoted price. An invoice is your request for payment after the work is delivered. A receipt is your confirmation that payment was received.
Mixing these up causes real problems. Sending an invoice before the work is done confuses your client and may violate your contract terms. Sending a quote when you mean an invoice delays your payment. Each document has a specific purpose in the transaction lifecycle — use them in the right order.
For ongoing client relationships, you may skip the quote and purchase order stages and move directly to invoicing on a recurring schedule. This is common in retainer arrangements, subscriptions, and monthly service agreements. Document the agreed billing cycle in your contract so invoices are expected, not surprising.
Keep all your financial documents — quotes, invoices, and receipts — organized in a dedicated workspace for each client. This makes it easy to reference past invoices, track payment history, and prepare for tax season.
How to Handle Late Payments
Late payments are inevitable, but your response system should not be improvised. Build a follow-up cadence into your invoicing process: send a friendly reminder on the due date, a firmer reminder at 7 days overdue, a formal notice at 14 days, and escalate at 30 days (typically involving a phone call or pausing future work).
Prevention is more effective than collection. Include late payment terms on every invoice — for example, ‘A 1.5% monthly fee applies to balances overdue by more than 15 days.’ Even if you never enforce the fee, its presence on the invoice motivates timely payment.
For chronically late clients, consider switching to milestone billing (50% upfront, 50% on delivery) or requiring payment before the final deliverable is released. These arrangements protect your cash flow without damaging the relationship, as long as you set expectations before the project begins.
Track your average days-to-payment across all clients. If it is trending upward, your invoicing process or client selection may need adjustment. If one client consistently pays 60 days late on net-30 terms, that is a conversation worth having — or a client worth reconsidering.
Invoicing Best Practices for Freelancers and Agencies
Send invoices on a consistent schedule — the same day each month or immediately upon milestone completion. Consistency trains your clients to expect and prioritize your invoices. Irregular invoicing leads to irregular payment.
For agencies managing multiple clients, standardize your invoice template across all accounts. This reduces errors, speeds up preparation, and presents a professional image. Your template should include your branding, standard payment terms, and clear itemization format.
Always invoice in the currency specified in your contract. If you work with international clients, clarify whether the amount is in their local currency or yours, and who absorbs exchange rate fluctuations. Ambiguity about currency leads to disputes at payment time.
Maintain a running invoice log that tracks: invoice number, client name, amount, date sent, payment terms, date paid, and amount received. This log is essential for cash flow forecasting, tax preparation, and identifying clients who consistently pay late. Share the invoice as a live link so the client always sees the current version — if you need to adjust a line item, the update appears instantly.
Xtensio’s FREE Invoice Template and Editable Examples
Your starting point to create and share professional billing statements, without any design experience.
A step-by-step guide to creating a professional invoice
Whether you’re a freelance photographer who needs to record your services and expenses for payment or a rental car service requesting payment from a customer, a bill needs to be created. Just like many other accounting documents, billing statements follow a certain structure to include any and all information that the client will need in order to make a payment. While invoices follow a similar structure, you can use Xtensio’s editor to customize the content and layout to make it your own. Add a background image, move modules around, or even add your own fonts to keep your statements ‘on brand.’
1. Your company information
When making an account statement, it’s important to clearly explain who is requesting payment (i.e. list the necessary information about your company). Add your logo, state your legal company name, company address, phone number, fax number (if applicable), and email.
Unlike many other business documents used in sales and marketing, billing statements don’t include a company ‘about’ section or a brand tagline. If you want to keep your statements professional, include only the necessary amount of information. That being said, your invoices don’t have to be boring either. Pay attention to details and show your brand with a custom design!
2. Who is the statement for?
After mentioning the details about your own company, state the information about the person/company to which the statement will be billed to. One of the significant elements of a proper invoice is to differentiate the payer and the payee in clarity.
Quick Tip: Be extra careful with spelling when it comes to creating a billing statement. Double-check names, addresses, and emails to prevent any mistakes. No one likes seeing their name misspelled, especially when someone wants payment from them!
3. Issue date, due date, and invoice number
Aside from clearly stating the payer and payee details, you need to indicate dates and a unique identifier to ensure timely payment and make it easy to organize your billing statements.
- The date statement was created
- Date payment is due
- Unique identifier (bill number)
Quick Tip: When it comes to organizing and recording billing statements, it’s critical to assign a unique bill number to each document. This greatly simplifies payment communication with clients. It is more professional to refer to a unique identifying number rather than “the invoice I issued last week.”
4. Products, services, or expenses sold
Here you will need to list all goods or services, along with any additional expenses, being invoiced. Make sure this section is comprehensive, concise and accurate to ensure that both parties, payer and payee, are aligned. Here are some items that could be listed:
- Are you a freelancer providing a service? Did you have any additional expenses (food, travel, etc) that went along with the gig?
- Are you creating a bill for a guest´s stay at your bed and breakfast? List the nightly room rate and any additional services or paid goods the guest used during their stay.
- List each element of the statement separately and in detail.
5. Taxes, Discounts, Fees
Any extra fees or factors that will be added to the total at the conclusion of the billing statement must be specified. Discounts, taxes based on the state/country you’re in, service fees, or other additional expenses that aren’t included in the invoiced goods but will be added to the total should be included.
6. Total Amount
The amount that is expected to be paid needs to be stated for both you to record and your client’s reference. To calculate the total amount due, list the discounts (with a “-” before the discounted price), fees, and taxes under the subtotal of all billed items and add them up. Always double-check the total amount before sending it to make sure your calculations are correct.
7. Payment Terms
To prevent any confusion and unnecessary back-and-forth communication, clearly indicate all payment terms on your account statement, such as:
- How many business days does the payer have to make payment?
- How should payment be sent (check, cash, credit card, direct deposit)?
- Do you accept payments through PayPal or any other online services?
- Are there any other specific terms that should be mentioned?
In the case of direct deposits, you should also include the address associated with the bank account. You might be using a different email address for online payments that weren’t previously listed. To provide information, fill out the address area under “Payment Terms.”
End your bill like a pro. It’s always good to thank your clients for the payments they are making at the bottom of your billing statement. Feel free to customize your note depending on your business. (“Thank you for your stay“, “Thanks for your trust” etc.)
Share it effortlessly, update it as needed
When you’ve finished creating your invoice with Xtensio’s editor, you have dynamic outputs for sharing it with clients. You can send the live link to your folio to share it as a responsive webpage (and add password protection) or export a PDF to mail to a client. The template is adaptable just like other Xtensio tools, it can and should be repurposed, revisited, and revised to suit your evolving needs.
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Invoice vs Receipt vs Quote vs Purchase Order
Invoices are one piece of a larger billing document lifecycle. Confusing these documents leads to accounting errors, payment delays, and awkward conversations with clients. Here is how each one works and when to use it.
Quote (or Estimate). A quote comes before any work begins. It tells the client what the project will cost based on your current understanding of the scope. Quotes are not legally binding in most cases, but they set expectations. Include line items, quantities, unit prices, and a validity period (typically 30 days). Once the client approves the quote, it becomes the basis for your contract or statement of work.
Purchase Order (PO). A purchase order is the client’s formal authorization to proceed. In enterprise and government procurement, a PO number is required before any work starts and must appear on every subsequent invoice. POs specify what was ordered, the agreed price, delivery date, and payment terms. If your client uses POs, always confirm you have one before beginning work.
Invoice. An invoice is your formal request for payment after delivering goods or services (or at a milestone defined in your contract). It references the PO number (if applicable), lists what was delivered, the amount due, payment terms, and your payment details. A professional invoice is numbered sequentially, dated, and includes clear instructions for how to pay.
Receipt. A receipt confirms that payment has been received. It is issued after the client pays, not before. Receipts include the original invoice number, the amount paid, the payment method, and the date of payment. In some industries, receipts are required for tax documentation and expense reporting.
The sequence flows in one direction: Quote (agree on price) to Purchase Order (authorize the work) to Invoice (request payment) to Receipt (confirm payment). Smaller projects often skip the PO step, going directly from quote to invoice. Freelancers and small agencies frequently combine quotes and invoices into a single document, but separating them creates a clearer paper trail and reduces disputes.
Keep all billing documents for each client organized in a dedicated workspace, so your team can find any quote, invoice, or receipt without digging through email threads.
5 Invoicing Mistakes That Delay Payment
Late payments are rarely about the client’s willingness to pay. Most delays come from invoicing errors that create friction in the accounts payable process. Fix these five mistakes and you will get paid faster.
1. Missing or unclear payment terms. If your invoice does not specify when payment is due, the client’s AP department will default to their longest payment cycle, which could be 60 or 90 days. State your terms explicitly: “Net 30” (due in 30 days), “Due on receipt,” or a specific date. Include late payment fees if applicable. The payment terms on your invoice should match the terms in your contract.
2. Incorrect client details. A wrong company name, outdated billing address, or missing PO number can route your invoice to the wrong department or trigger an automatic rejection. Before sending, verify the legal entity name, billing address, tax ID (if required), and any reference numbers the client needs on the invoice. One wrong field can add two to four weeks to your payment timeline.
3. No invoice numbering system. Sequential invoice numbers are not just good practice. They are a legal requirement in many countries. Without a consistent numbering system, you cannot track which invoices are outstanding, which are paid, and which are overdue. Use a simple format: year-sequence (e.g., 2026-001, 2026-002) or client code-sequence (e.g., ACME-001). Never skip or reuse numbers.
4. Sending to the wrong contact. The person who approved your project is often not the person who processes invoices. Ask your client contact for the specific email address or portal where invoices should be submitted. Large organizations may require invoices to go through a procurement system or a dedicated AP email address. Sending to the project manager instead of AP can delay payment by weeks while it gets forwarded internally.
5. No follow-up process. Sending an invoice and waiting is a recipe for late payment. Build a follow-up cadence: a friendly reminder three days before the due date, a firm notice on the due date, and a formal overdue notice seven days after. Automate these reminders if possible. Share your invoices as live links so the client can always access the current version, and you can see whether they have viewed it before you follow up.
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