How to Make an Invoice

Invoices are an effective way to request payment, document transactions, and keep clear records for both you and your clients. Because invoices are such crucial financial documents, you must approach the invoice creation process with attention and care. This means identifying tools that meet your needs, selecting a format that reflects your brand, and ensuring every invoice includes accurate, complete information.

If you’re creating an invoice for the first time or just want to make sure you’re doing it correctly, here’s a detailed guide. 

1. Choose a Business Invoice Generator

The first step in making an invoice is choosing a platform to create, send, and manage your invoices. The right generator depends on your budget, invoicing volume, and how closely you want invoicing to connect with your broader financial workflows.

Bookkeeping Software

Examples: QuickBooks, Xero, FreshBooks

Most small business bookkeeping software offers built-in invoicing tools, which let you create, customize, and send invoices to clients. They often come with a decent selection of basic invoice templates, sparing you from the burden of designing your invoices manually. 

The most significant advantage of using bookkeeping software for invoicing is its natural integration with your bookkeeping system. Systems like QuickBooks, for example, automatically track and record your income in your journals as invoicing activity occurs, allowing you to generate reports, forecasts, and tax calculations with ease. Some systems also summarize invoicing activity, including total income for a given period, outstanding payments, and overdue balances.

The downside is cost and complexity. Many bookkeeping software programs charge high monthly fees, which smaller businesses may find too pricey. They also take time to learn, and the extra features can feel overwhelming if you only need a simple invoice. If your business has smaller invoicing needs, consider lower-cost alternatives. 

Invoicing Software

Examples: Zoho Invoices, Invoice2Go, TrulySmall Invoices

A cost-effective alternative to full-service bookkeeping software is invoicing software. These solutions charge lower monthly fees and center their services around invoicing and payment acceptance. Most invoicing software provides invoice templates, payment links, and payment reminders to keep your invoicing workflows smooth and streamlined. Many also let you track when clients view or pay an invoice.

Using bookkeeping software is still better overall because of the increased scope. These solutions record invoices, taxes, and expenses under one system, which makes reporting and tax calculation workflows much easier. If you want complete financial tracking in one place, this option may feel incomplete.

Payment Platforms

Examples: Stripe, Square, PayPal, Veem, Wise

Many payment acceptance platforms let you create invoices and accept payments in one place. They let you create invoices as you send payment links, which speeds up the payment acceptance workflow. They work well for freelancers and small businesses that work digitally or serve international clients. 

The drawbacks include fees and limited customization. Most payment platforms charge transaction fees, which can add up over time. Invoice design options also tend to feel basic and rigid. If you need detailed invoices for accounting or tax reporting, you may need a separate system to fill the gaps.

Word Processor

Examples: Microsoft Word, Google Docs

If you want to save on software subscription fees, consider creating invoices with a word processor. These tools usually provide basic invoice templates. However, they also provide greater control over wording, layout, and design. Word processors are cost-effective, intuitive, and straightforward, making them great invoice generator options for beginners, freelancers, or very small businesses. 

The tradeoff is efficiency. Word processors do not calculate totals automatically, so the risk of data entry errors increases. Additionally, since each change requires manual edits, updating repeated invoices also takes more time. If you invoice often or need automation, this method can slow you down.

Spreadsheet Tool

Examples: Excel, Google Sheets

A more efficient alternative to word processors is spreadsheet tools. While less user-friendly, they provide a greater degree of automation, allowing you to calculate invoice totals with simple formulas. Spreadsheets also work well for repeat invoices, since you can copy and update existing files. They give you full control over your invoice layout and calculations, and are easy to store and organize. 

However, spreadsheets rely heavily on manual effort, which can slow your workflows. Unlike bookkeeping software or invoicing software, they don’t provide built-in formulas, which means you need to figure out how to calculate totals and tax rates on your own. Additionally, small formula errors can lead to erroneous totals, which themselves can lead to losses in income or customer trust. 

2. Choose an Invoice Format

The next step in making an invoice is to choose an appropriate format. Most businesses send PDF invoices, but online invoice links and paper invoices are also valid options depending on your specific payment situation. 

PDF

The PDF format strikes a good balance between clarity and reliability. Because PDFs maintain a consistent layout across devices, they are easy to open, save, and print. PDFs also prevent accidental edits, which helps protect your numbers and wording.

Online Invoice

Online invoices come from invoicing tools or payment platforms and usually arrive as a link. They work well for freelancers and small businesses that want faster payments and built-in reminders. Many payment processors let clients pay with a card or bank transfer in a few clicks. This convenience often leads to quicker results.

Paper Invoice

Paper invoices are best for businesses that work in traditional or local settings, where some clients may prefer tangible invoice documents. Because they provide a physical record, paper invoices can feel more personal and direct. However, they also create extra work, and take time to print, deliver, and store. If not digitized, they also increase the risk of loss or damage. If your clients prefer the formality and tangibility of paper invoices, consider supplementing them with digitized records. 

3. Choose an Invoice Template

The next step is to select an invoice template. Bookkeeping software, invoicing software, or payment processors often come with built-in template libraries. Spreadsheet tools and word processors provide basic invoice templates, and you can also find user-made templates online.

When choosing a template, prioritize functionality, clarity, and customizability in that order. Your invoice should allow you to display all necessary details in a clean and readable format. Make sure information flows in a logical manner that is easy for customers to understand. 

Customizability is an optional but helpful bonus. While it helps to express your brand voice through documents like invoices, sometimes it’s enough to provide essential information in a clear and professional format. Anyway, free tools typically offer limited personalization options, restricting you to basic templates that include provider-branded watermarks.

If possible, choose colors and fonts that align with your brand image. This strengthens your brand identity and makes you more recognizable to clients. Higher-tier bookkeeping software or invoicing tools also allow you to add your business logo. This allows you to convey an improved sense of professionalism and cohesion, which improves brand trust. 

4. Enter Invoice Details

After selecting a template, fill out the necessary information. This includes everything from your business details to payment instructions.

Business Information 

Your header should contain all key business details, including your legal business name, business registration number (if GST or HST registrant), address, phone number, and email address.

Customer Information 

This means customer details, such as their name, company, address, phone number, and email address. 

Invoice Number

This is a unique number that distinguishes the transaction from other invoices. Including an invoice number makes transactions easier to track. 

Relevant Dates

Include the date of issue and the payment due date. 

Description of Goods and Services

This is a detailed description of the product or service provided. If you are selling a product, include the number of products sold. If you are selling a service, include the number of hours worked. 

Totals

Include the cost per item (or per hour worked) and calculate the total amount the customer owes. If you are a GST or HST registrant, you must show tax separately and apply the tax rate corresponding to your province.

Payment Instructions

Tell the client how to pay the amount owed. This means specifying accepted payment methods (e.g. bank transfer, credit card, or PayPal). 

Other terms and conditions

Finally, include other relevant payment terms. Examples include fees or penalties for late payments, delivery schedules for products or services, dispute resolution terms, refund and return rules, and confidentiality agreements. 

5. Send Invoice to Client

The final step is to send your invoice to your client. With most platforms, including bookkeeping software, invoicing software, word processors, and spreadsheet tools, this step requires downloading your invoice and attaching it to an email. However, payment processors will let you send links directly through the platform. They also send emails automatically to notify your client.

FAQs

Why do businesses need invoices?

Invoices allow businesses to request payment, document transactions, and maintain clear financial records all at once. They provide a professional way to bill clients, allowing you to set a payment deadline rather than requiring immediate payment upon product or service delivery. With invoices, you create a paper trail that prevents disputes and ensures business-client transparency. 

When are invoices legally necessary in Canada?

Canadian law requires GST and HST registrants to use invoices. These documents serve as proof that the business collects the appropriate amount of tax and allows customers to claim input tax credits. The Canada Revenue Agency (CRA) requires invoices to display the tax charged, the business’s registration number, and details of the goods or services sold.

How long must a business keep invoices in its records?

The CRA requires businesses to keep invoices for at least six years. This ensures that the business maintains a clear record of income, expenses, and taxes paid. Additionally, proper record-keeping gives businesses strong supporting evidence against audits, client disputes, and other issues. 

Start Your Bookkeeping Journey with EpicBooks

The right partner can turn financial management into a breeze. EpicBooks offers scalable bookkeeping services; our packages cover everything from transaction recording to reconciliation to reporting. Our accounts receivable add-on also lets you offload the burden of invoice creation, tracking, and management. Work with EpicBooks to simplify your finances, streamline bookkeeping workflows, and focus on growing your business.