The invoice number is a unique number generated when a company invoices its customers. This number is included on the invoice and is used to track payments. When a customer makes a payment, they reference this number to show that the funds were used for that particular invoice.
What is an invoice?
An invoice is a bill, a list of products or services provided to a customer that must be paid for. It is a list of products or services provided to the customer for which payment must be made. An invoice is issued by the seller (or supplier) near the end of the transaction process, when the product has been delivered or the service has been rendered. The invoice details the price previously agreed upon, which the buyer should pay now that the order has been completed.
A proper invoice should include the following
- Invoice date
- Invoice number
- Supplier contact name, company name, address, phone number, email address
- Customer contact name, company name, address, phone number, email address.
- Purchase order number
- Description of the product or service, including price and quantity.
- Date of delivery of the product or service to be provided
- Subtotal
- Taxes
- Total
- Payment terms (when payment is due)
- Late Payment Warning
- Payment Method
Do invoices need an invoice number?
Invoice numbers are important because they provide a way for businesses to track not only whether a payment has been made or not, but also a way to track the payer.
Often customers will reject invoices that do not provide an invoice number because it makes tracking payments impossible or difficult. This means that the vendor must take the time to reissue the invoice.
Sequential Invoice Numbering
Most enterprise accounting software uses sequential invoice numbering by default. Sequential invoice numbering is the basis for creating unique invoice numbers. The invoice number starts with the number “1” unless you override it. For example, if you prefer a five-digit invoice number, you can replace the “1” with the number “10000”.
Chronological Invoice Numbering
Assign invoice numbers in chronological order. For example, the invoice number format generated on an invoice with customer number 1024 on January 20, 2021 would be 20210120-1024-00. The first series of digits is the date, the second series of digits is the customer number, and the third series of digits is the sequential unique identifier for the invoice.
Begins with a customer number
Invoice numbers begin with a customer number to give yourself an assisted method of identifying an invoice as belonging to a specific customer by just looking at the invoice number. This method is similar to the chronological numbering method. An invoice numbering system that relies on a customer number will start with that number.
If you generate a second invoice for that customer on that date, the invoice number will be 20210120-1024-01. Use any date format you choose. Available date formats include 01202021 210120, and 012021.
Start with the Project Number
If you want to determine which project an invoice belongs to by looking at the invoice number, use the project number as part of the invoice number. This method of invoice numbering is beneficial for construction companies and other companies that take on projects, where the project number is one of the most important numbers. The invoice number begins with a unique project code, followed by the date.
Examples of project invoice numbers include 1024-SW555-01 (customer, project, sequential) and SW555-1024-01 (project, customer, sequential).