Simple Invoicing for Small Businesses
One of the most common questions I get with regard to my invoice template is how to keep track of the invoice numbers. This and other questions are almost all related to basic invoice management tasks, such as how to archive the invoices, manage invoices for major clients, etc. In this article, I will share with you a simple approach to invoicing that can help you keep your business running smoothly.
UPDATE (6/21/2012) - We just released a new tool specifically for helping you create and manage your invoices with Excel. See our new Invoice Assistant.
A Simple Approach to Invoicing
I certainly don't claim to be an invoicing expert, but because I am a small business owner, I will share with you an approach that I use. I'm not being hypocritical, either - I really do NOT use QuickBooks for invoicing - I really DO use my own invoice template.
Step 1: Save a Master Copy of your Invoice
Using the original invoice template, save a copy which has your business's address and contact information. Complete the section 'Make all checks payable to ...', and at the bottom of the invoice, fill in your contact information. Add your logo, company name, address, phone #, and fax # in the upper left. When you're done, create an 'invoicing' directory on your computer for saving all your invoices, and name your master invoice:
The '00000' is a placeholder for the invoice #.
Step 2: Create a Template for Each Major Customer
The next step in setting up your own invoice system is to create a template for each of your major clients or customers. Starting from your master copy, add your client's information into the Bill To section and save a copy with a unique name, possibly including the customer ID in the filename as well. Your invoicing directory will then look something like this:
The numbers in brackets (e.g. ) are the customer ID numbers. Customer ID numbers are normally used when you use a database for managing contact information and accounting. If you are a small company, but want to look like a larger company, you can make up Customer ID's, and you should probably start with a number larger than 001. I don't know of any rules that say the numbers need to be sequential, either.
Hint: You may want to save your templates as actual 'template' files (.xlt or .xltx) so that you don't accidentally save new invoices over the top of your original templates. After you open a .xlt file, if you then try to save the file, it will automatically prompt you to save the file with a new filename. Or, make it a practice to always make a copy of the template and rename the copy BEFORE making any changes.
Step 3: Use the Invoicing Directory Tree to Keep Track of the Invoice #
Whenever you create a new invoice, name the file using the Invoice # as shown in the example below. When you sort your invoicing directory alphabetically, the latest invoice number will always show up last (or first if you sort it in reverse).
Note: When you sort your files in your directory alphabetically, you should include the leading zeros so that 00010 is correctly listed AFTER 00001. Try experimenting with NOT including leading zeros, and you'll see what I mean.
When your directory of files gets unmanageably large, create a subdirectory called 'archive' and move all your older invoices into that directory.
Step 4: Print 3 Hard Copies
After creating your invoice, print 3 copies. Give one to the customer. File one by Invoice #, and file the last one by Customer.
There are certainly other ways (and probably better ways) to manage your invoicing, but unless you are lucky enough to need faster more efficient invoicing software, I think you'll find the approach I've outlined above perfectly acceptable.
One thing I didn't talk about in this article is how to manage your accounts receivable - or in other words, how to track which customers still owe you money, send billing statements, etc. I've created a billing statement template specifically for invoice tracking that you can use as part of your invoicing system.