Why is the invoice number so important?

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For small business owners and freelancers who work online, the number one priority that defines the success of your operation should be getting paid properly.

There is absolutely no question about it – whether you juggle numerous gigs as a side hustle, or run your services business full-time, there needs to be a system in place to allow you to calculate the work you’ve done and bill your clients accordingly. This is when the invoice number starts to become important.

Enter the invoice. A professional-looking and individually crafted document that sets out everything you need to get paid from a client for the work you’ve done. The invoice contains your business name and contact information, your client’s contact information and the totals (including the breakdown if needed) of the amount your client owes you.  

In addition to all of those necessary details, there is also one more important detail that should be included in your invoice – the invoice number. What is an invoice number, and why is it important? We explain more about it in the article below.

How do I find the invoice number?

You can find the invoice number usually on the top of the invoice, near the contact details and business details. It can either be placed on the left or right side. The first invoice number would normally read as “Invoice #001” to represent the first invoice you send to a new client, or “Invoice #002, #003”, etc for subsequent invoices to the same client.

What is meant by invoice number?

An invoice number is a unique and important component of professional invoicing. It enables you to keep track of all the invoices that you send to your clients, and acts as an identifier that documents the work that you’ve done for your clients so that you can easily pull them up when it comes to tax time, or when you need to dispute certain payment issues.

This helps you avoid confusion when you’re handling a bunch of invoices for the work you’ve completed. It doesn’t really matter what kind of numbering system that you use, as long as they are done in sequential numbering order.

This means that even if you have many clients, every invoice that you create and send has a unique identification number that allows you to track who has paid you and who hasn’t, and you can track how much work you’ve done for a particular client based on the number of invoices sent out to them (reflected in the invoice number).

Invoice number

Is invoice number the same as bill number?

The two terms “Invoice” and “Bill” are commonly used interchangeably by everyone from accountants, to business owners and their customers. By definition, a bill is a document produced by a business to outline the amount of money that is owed by a customer. The information that is written in a bill is usually minimal apart from the payable monetary value and perhaps contact details of the seller.

Invoices, on the other hand, are documents that specify all the important details of a sale of goods or services and usually follow a specific template. They contain a complete breakdown of goods sold or services rendered, payment terms and methods, and include highly detailed contact information of each party involved in the transaction.

They are also considered to be official documents – although they aren’t technically legally binding documents in and of itself, they are vital pieces of information that can be used together with other documents such as contracts during a legal dispute.

In short, a bill number is an identifier of a particular bill, and a bill may include multiple invoices in it. An invoice number identifies an itemized list of goods or services that you have provided for your customer.

How many digits is an invoice number?

Generally speaking, there is no hard and fast rule as to how many digits you should use in your invoice numbering system. It largely depends on how much work you think you’ll be doing with your client – if you’re looking at a long, prosperous business partnership down the road, then more digits are always a good idea.

The only thing to remember when numbering your invoices are to ensure that they are sequential. Assigning invoice numbers chronologically allows you to easily identify every unique transaction – this is especially important as your business grows and you start getting more individual clients to track payments with.

How should I format my invoice number?

Here are some of the best practices used when formatting an invoice:

  • Create unique invoice numbers for each one you send.

Numbers are the easiest way to distinguish one document from another. This is why we have page numbers in books and all printed media! Every one of your invoices should have a unique identifying number that is easy to see, especially if you’re filing physical copies away in a folder or drawer.

  • Ensure that they are sequential.

Sequential invoice numbers represent how much work that you’ve done for each and every one of your clients. This helps you to identify which client gives you the most work, and allows you to establish whether a client’s business relationship with you is worth keeping for the long-term.

  • Structure your invoices with letters as well as digits.

Apart from just numbers, using letters at the start of your invoice numbers can potentially make invoicing a lot easier to manage. This is especially useful when your client needs you to work on a large project and you are expecting to send a lot of invoices whenever a milestone is completed.

Some of the more common methods of using letters is to use acronyms of the company name of your client, or project name as a unique prefix in front of the invoice number, so you’ll always be able to identify all the invoices that are involved in the particular project.

  • Use specific invoicing software to create professional invoices.

If you’d rather leave your invoice creation to the professionals, there are many companies that develop invoicing software available online. What the software does is basically generate unique invoices (including invoice numbers) that you can use to send out to your clients when you need to request payment. Some accounting software also provide this feature as a standard.

Some of the biggest draws of invoicing software is the fact that they are always made to be easy-to-use and offer a fully-automated invoice creation process. The software also warns you if you’ve created duplicate invoice numbers which may cause a lot of confusion down the line.

This means that you can focus on getting more clients, and more income in order to grow your business without worrying about the nitty-gritty, technical stuff in the background.

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