Why Online Invoicing Is Beneficial and What to Include

By Indeed Editorial Team

Published January 3, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Whether you're a freelancer, or someone selling a product or service over the internet, being able to create and send invoices online is a helpful and efficient way of requesting payment. There are many benefits to invoicing in this way, and doing so is simple and accessible. Understanding what online invoices are and how to make the most of them is key to using the internet to conduct your personal or business accounting. In this article, we define what online invoicing is, describe the benefits, explain who can use them, and outline their components.

What is online invoicing?

Online invoicing is the process of creating invoices using online financial tools to request payments or represent the payment of past transactions. Suppliers can provide an electronic invoice when you purchase something online, or freelancers can send an invoice to those they've completed work for to request payment. Invoices contain all the vital information of the product's or service's provider, its recipient, payment details, and a comprehensive list of every payable item with a total. Invoices are valuable records of transactions that accountants and individuals use to keep track of them.

Invoices are similar to bills in that they represent a transactional record, but different in many ways as well. Bills tend not to be itemized and usually relate to regular expenditures rather than one-off payments. For instance, you're likely to get a bill for utilities such as electricity or water rather than an invoice. This is because you already have an agreement to consume these utilities, and the bill informs you how much you owe. An invoice would more likely be relevant to the delivery of various supplies for which you owe a payment.

Who can use online invoicing?

Many people or businesses can use online invoices to record or request payments. Whether a system automates them or you write them up yourself, using the internet to create, deliver, or pay invoices is increasingly convenient. Here is a list of people or businesses that can benefit from invoicing online:

  • Freelancers: Invoicing online makes it easy for freelancers to send itemized breakdowns of the service they provide, their payment terms and details, and total fee.

  • Online retailers: Online retailers often automatically generate invoices and send them to customers after they've completed an online purchase.

  • Tradespeople: Because of the ease and convenience of creating online invoices, it's common for tradespeople to send invoices for their services to their client's email addresses.

  • Booking agencies: Booking agencies may send invoices to customers who've purchased their tickets as a record.

Related: How to Create an invoice (With Steps and Template)

Benefits of invoicing online

There are many benefits to invoicing online rather than through more traditional methods, like postage or in-store. Some of these have to do with the ease of using a digital system to produce their invoice, while others relate to the simplicity involved in delivering them to their customers or clients. Here are some of the main benefits you can get from invoicing online:

Make sure products are present

Many online retailers send invoices to the recipients of their orders. Doing so provides a record of how much they spent, but more importantly, a list of the items they ordered. This means that when they receive the order, they have a list of the items they've paid for, to make sure that everything has arrived. Included on this itemized list is the individual price of each product, against which customers can make sure they paid the correct amount.

Immediate confirmation of payment

When making purchases online, retailers often send out an invoice immediately after the point of purchase. This confirms to customers that they have completed their order and successfully paid for their items. Occasionally, retailers may also include delivery time estimations with their invoices. Because businesses can send these invoices immediately via email, it's the fastest way to deliver payment confirmation to their customers.

Related: What is Accounts Payable? (Required Skills and Duties)

They can be editable after sending

Many online invoicing programs allow people to edit invoices once the sender has already sent them to payees. This can be helpful if those sending the invoice make an error, or if the customer or client wants to amend the items on the invoice. In this instance, the invoice sender can amend the invoice and send the updated version quickly and easily.

Memorized fields

Another major benefit of invoicing using online platforms is that they can often remember and automatically populate fields that you may otherwise enter manually. These may include your personal details, like your name, account details, or product pricing. This can save much time in the process of writing up invoices, especially those which include the same basic information.

Components of an online invoice

Online invoices share many of the same fields and pieces of information as typical invoices. These fields may provide information about the product or service, seller, customer or client, or the transaction terms or details. Here are some of the usual information fields usually included in online invoices:

Date of writing the invoice

This is usually the first piece of information displayed on an invoice, representing the date the invoice creator made it. The date is necessary because it records the beginning of the payment period, meaning the length of time the buyer has to pay the invoice in full. When there's a strict payment deadline in place, including the creation date provides a record of when the expectation for payment began.

Names and addresses

A key piece of information to include is the name and address of both the buyer and the seller. Even though online invoices rarely get delivered in person, including this information helps to ensure that the invoice has gone to the right person by providing unique information about the client or customer. This is helpful when the addressee has a common name. The name and address of the sending business are equally important to include as it confirms the seller to the recipient, and shows them where they may return any faulty goods.

Related: What Are Accounting Transactions? (Definitions and Examples)

Transaction, order, or invoice number

A unique transaction, reference, or invoice number is a vital piece of information to include in an online invoice. This is because it provides a single numerical reference relevant only to that individual order or invoice. In the event of any errors or follow-ups needed to the invoice, these identifying numbers can give the recipient a way to help customer services or the seller find their order in their system. These numbers also help with record-keeping by providing a shorthand with which to record the identity of each invoice.

Contact information for the accounting department

Invoices may include direct contact information for either the accounting staff or their customer service department. This gives the recipient somewhere to direct any questions, concerns, or feedback, and allows them to reach the people who may be the most capable of helping them. This section may include direct contact numbers, which can help sellers resolve customer issues efficiently and quickly.

Summary of payable items

As with physical invoices, online invoices include a detailed summary of the items or specific services in the transaction that their invoice relates to. This is usually in the form of an itemized list, often including brief product descriptions. Usually, each item takes a place on a new line. The itemized summary helps the recipient in determining if the products they received are correct and that the prices are correct.

Terms of payment

The last official piece of information to include in an invoice is the seller's particular payment terms. Usually, this includes the total sum owed, the period of time in which the buyer has to pay in full, and preferred methods of payment. In your terms of payment, you can even include any particular references for payees to include when making their payment online. This information is usually a feature of invoices sent for the purpose of requesting payment, rather than to confirm payment which the buyer has already made.

A thank-you message

This is an optional element to include, but one that adds a personal touch and helps to build a relationship with the recipient of the invoice. A simple message in the notes section of your invoice can add a sense of goodwill. For small businesses, freelancers, or companies that rely on regular customers, including positive messaging can help to instigate repurchases or invest more interest in the brand. Customers who feel better about the businesses they spend their money with are more likely to tell their friends and family and introduce more business prospects or opportunities.

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