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What is an Invoice?

Author Ted Sclavos
Ted SclavosContent Director
Summary5 min read

An invoice is a written document that lists and itemizes goods and services provided to the recipient. It briefly describes the transactions completed, the associated cost of each of these transactions, and the terms of payment requested by the party who completed them.

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An invoice is a written document that lists and itemizes goods and services provided to the recipient. It briefly describes the transactions completed, the associated cost of each of these transactions, and the terms of payment requested by the party who completed them.

An invoice functions as a formal request for payment, as well as documentation of that request that can be filed and referenced for proof of transaction. Vendors use them to keep track of what has been or will be exchanged in a deal or service and how much that exchange will cost.

This content is for general educational purposes only and is not intended, and should not be considered, legal advice.

Why are invoices important?

In addition to serving as a formal document announcing that payment is due for a business transaction, invoices are essential for effective business accounting. Businesses must keep copies and records of every invoice they send to a customer to prove that the transaction took place and to keep track of how much payment was received from it. 

How to write an invoice

While there is no official list of what is required to make a document an invoice, there are several standard elements that should be included in every invoice you produce.

Omitting any of these fields will not necessarily invalidate an invoice, but it may result in additional questions from the customer. Depending on what’s missing, you may even need to write and send a new invoice with more information attached. This kind of issue is common and has the potential to significantly slow down payment and the proper documentation of transactions. Thankfully, it’s easily avoidable.

What is included in an invoice?

As you create your invoices, be sure to include all of the following information:

  • Statement of invoice: clearly state that this is an invoice at the top of the document.

  • Invoice number: all invoices should have a unique identifier called the invoice number. This signifier is used to catalog all invoices a business sends in order, so they can be quickly referenced in the future.

  • Vendor and client contact information: includes the names, addresses, phone numbers, and often email addresses of each party.

  • Issue date: the date an invoice is sent is an important record for ensuring that both the vendor and customer are complying with the terms of payment.

  • Terms of payment: even if the terms of payment are established in a separate document such as a contract or purchase order, they should also be included in the invoice for proper documentation.

  • An itemized list of goods or services being purchased: include a complete accounting of what was provided, along with the units for each.

  • Taxes, fees, credits, and penalties: include the price of the goods or services being provided and anything else that will impact the total cost, including any taxes, credits for previous deposits, or late fees from previous invoices.

  • Amount owed, and total amount if applicable: if the payment terms call for payments to be made in installments, the amount owed for each installment should be listed, including the total amount due for the first payment along with the total amount due.

Do invoices need to be signed?

An invoice is simply a record of a transaction, not a legal agreement. Because of this, neither the creator nor the recipient of the invoice needs to sign it for the document to be considered valid.

There are good reasons to request a customer sign your invoices, however, making it a fairly common practice. Signing an invoice ensures that all involved parties acknowledge and agree with the information on the invoice.

If you are working with a digital invoice, an electronic signature field can be added to make signing faster and simpler. 

Is an invoice proof of payment?

No. Generally, an invoice is a document specifying that payment is due, not completed. 

Automate invoice generation

For enterprise organizations that deal with hundreds or thousands of invoices a year across multiple vendors, preparing and sending invoices can be time-consuming.

A digital document automation system can create and distribute invoices automatically. A best-in-class invoice solution also offers batch invoice generation, customizable templates, and Salesforce object support.

Benefits of digital invoices

Paper invoices have been the norm for centuries, but just as with nearly all other business documents, they are increasingly becoming digitized. Digital invoices present many advantages over paper, such as:

  • Reduced mistakes due to human error

  • Digital audit trail 

  • Automated creation and sending

  • Easier and more permanent electronic documentation 

  • Integration of invoice information with digital search tools, making it far easier to find and access specific invoices within your database

  • Integration of invoice payment information with business analytics technology, enabling faster analysis of invoice data

  • Faster time to payment

  • Lower cost

  • Reduced paper use

Add an option to pay digital invoices

One of the most common frustrations associated with invoices is the lag between when an invoice is sent and when payment is received. With digital invoices, however, an option to pay can be added directly to the invoice itself. This makes it easier for customers to pay right when the invoice is top of mind. 

Send digital invoices with Docusign 

Whether you are creating and sending hundreds of invoices a month or just a few each year, Docusign has a solution to make invoicing easier. To get started with creating digital invoices, sign up for a Docusign free trial.

Author Ted Sclavos
Ted SclavosContent Director

Ted Sclavos builds content experiences at Docusign that help our customers learn about agreements and intelligent agreement management.

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