As soon as a startup has completed its first order, you're faced with the important issue of invoicing. Anyone who needs to issue an invoice should follow certain guidelines. This article explains how to create a professional startup invoice.
What exactly is an invoice?
An invoice is a "notification of the payment due under the purchase agreement." This sounds complicated, but it's actually not. Essentially, with an invoice, a startup demands consideration for the service it has provided: namely, payment.
This distinguishes the invoice from, for example, the receipt, which only represents a confirmation of payment but does not function as a proper invoice.
When do startups have to write an invoice?
Every business owner is required to issue an invoice in order to correctly bill their customer for services. A customer can therefore legally request an invoice.
Anyone who needs to issue an invoice can take up to six months after the service has been rendered. However, it's a good idea not to let too much time pass between order fulfillment and invoicing. After all, as a startup, you want to get paid quickly, right?
What content must an invoice contain?
Certain mandatory information is required for invoicing. An invoice is only valid if it contains this mandatory information. These include:
• Address of the company and the customer
• Company tax number
• Invoice date
• Invoice number
• Service date
• Information about the product / service
• Price (gross, net, VAT rate and VAT amount)
In addition, it is useful to provide further voluntary invoice information:
• Payment deadline
• Bank details
• Further contact information (email address, telephone number)
Attention small business owners: If you want to write an invoice as a small business owner, you must make sure that the invoice is VAT-free.
How do you write an invoice and get paid quickly?
Typically, the invoicing process looks like this: write the invoice, send the invoice, wait for payment, and archive the invoice. Unfortunately, the third step in the invoicing process sometimes presents a problem: Not all customers pay on time. Therefore, it's important for startups to regularly check their incoming payments—and also send reminders for overdue invoices.
But there are also a number of preventative measures you can take to ensure that the bill is paid more quickly:
Grant a discount
Invoicing without a cash discount? It's better not to. Cash discounts are a strong incentive for customers to pay quickly. This is because they only receive the discount (usually around €31,448) if they pay within a very short payment period—for example, one week.
Specify payment deadline
Those who set a deadline tend to complete their tasks more reliably. The same applies to customers: If a payment deadline is specified on the invoice, the customer feels compelled to pay by that date. Therefore, be sure to specify a payment deadline when writing invoices!
Offer online payment options
Even as a startup, it's worth taking inspiration from established companies like Zalando every now and then. How do they encourage their customers to pay quickly? By offering online payment options directly in the online shop or on the invoice. Ideally, anyone who wants to issue an invoice should also include a link to online payment options like PayPal.
What should startups consider when designing invoices?
Once the invoice has been written, the next step is to create a professional invoice design. Ideally, the invoice design should be aligned with the startup's corporate identity. At the very least, the logo should be included on the invoice—so the customer can see at a glance who the invoice belongs to.
However, not only the layout of the invoice is important, but also its structure. Customers are accustomed to a certain invoice structure:
• Header: Logo, address, invoice date, invoice number, service date, due date
• Middle section: Information about the product / service including price
• Footer: Address, bank details, other contact information
How do I send an invoice correctly?
Just a few years ago, anyone who had to write an invoice would usually have printed it out, signed it, and then mailed it. This is no longer necessary today.
Startups in particular can save costs and effort by sending invoices online or by email—this eliminates printing and postage costs, as well as the need to go to the post office. But even large companies like Amazon now send their invoices exclusively by email.
Of course, you should not send the invoice without any comment, but rather write a quickly understandable subject line (for example, “Invoice No. XXX for your purchase at XXX”) and a short accompanying text.
Can you create an invoice and then delete it again?
Mistakes are human. And that's why it can happen that even a startup issues an incorrect invoice. Perhaps you mistyped the customer name? Or accidentally printed the wrong price?
In this case, you might think: “If I can create an invoice, I can just delete it, right?” But you shouldn’t do that under any circumstances — because the tax office doesn’t like deleted invoices.
The correct procedure is: Issue a cancellation invoice/correction invoice, negating the entire invoice—as it is. Then, issue another invoice—this time correct—and send it to the customer along with the correction invoice.
About the author
Andrea Lackner has been working as an accounting expert at Debitoor, an online invoicing program for startups. Here, she supports startups with all questions related to invoicing and accounting.
