Digital Invoice 101 - How To Create a Digital Invoice
January 09, 2023
Mailing invoices to your clients is an outdated way of invoicing. So why waste time with physical invoice copies, when you can create a digital invoice and email it to your clients in a few easy clicks?
Before we jump into the nits and grits of electronic invoicing, let’s cover what a digital invoice is, and why you should use it over an old-fashioned invoice.
This article will provide you with all the necessary answers and show you how to make a digital invoice, step-by-step!
What is a Digital Invoice?
A digital invoice is a legal document businesses use to request payments from clients for their products or services. It does the same job as your standard invoice, except it eliminates the need to write or print invoices on paper as they're usually in PDF format.
With this type of invoice, you can bill your customers digitally or via email, without having to do it in person or by mail. Digital invoicing allows you to streamline your payment process and make it clutter-free.
- Your and your client’s contact information
- Description of the goods and services provided
- Payment terms and additional notes
What is the Difference Between an Electronic and Digital invoice?
When it comes to digital invoicing, people often mix up digital and electronic invoices.
A digital invoice is not the same as an electronic invoice. As defined by Directive 2014/55/EU, an electronic invoice is a document that can be issued, transmitted, and received in a structured electronic format that allows automatic and electronic processing.
Essentially, an e-invoice is processed by an automated computer system that reads these types of documents, whereas a digital invoice is manually read by the recipient. E-invoices also come in different file types, such as spreadsheets, HTML, and word processor documents.
That’s why people prefer digital over the electronic form of an invoice. It’s easier to use, doesn’t require an electronic invoicing system, and it’s more affordable overall.
Benefits of Using a Digital Invoice
According to research conducted by IMARC Group, one of the leading market research companies, the e-invoicing market will supposedly reach a value of $8.74 billion in 2023.
As you can see, the demand for digital invoices is growing, which can be attributed to the numerous benefits they bring to the table, such as:
- Improved productivity. One of the biggest benefits of using digital invoices is that they are easy to create using templates. This can save you a lot of time, which you’d otherwise have to spend manually writing invoices from scratch.
- Reduced risk of human error. On top of being easy to make, digital invoices also reduce the risk of human error during the invoicing process. By using a template, all you have to do is fill in the blanks, and you won’t have to worry about forgetting any important detail about the client, payment, or job.
- Minimized risk of late payments. Once you have your digital invoice, it’s super easy to send it to your client. Simply forward them the PDF file via email, and they’ll receive it more or less instantly.
- Reduced invoicing costs. Don’t want to waste money on printing invoices, paying mail, adjusting errors on paper, and other avoidable costs? Use digital invoices and reduce your invoicing costs by a small but noticeable margin.
- Ease of access. Lastly, digital invoices make paperwork much easier, as you’ll be able to store them on the cloud, where you’ll be able to find them at any time effortlessly. More importantly, saving your invoices on a cloud platform secures your documents from natural disasters, data breaches, and cyber-attacks.
If you want to make digital invoices the easy way, try out our online invoice generator. It’s super simple to use and will provide you with a professional-looking invoice in no time.
What Does a Digital Invoice Include?
Now that we’ve given you a brief rundown of digital invoices, let’s find out what you should include in this important document!
#1. Company and Client Information
The first section of a digital invoice must include your contact information, such as your name, email and street address, place of residence, zip code, telephone number, etc. You can also add a logo for your business, which can help solidify your brand image.
This section should also specify who the invoice is for. So, include the recipient’s name, email address, and other important contact information.
Keep in mind that if your business and the business you are invoicing are located in one of the EU countries, then you must also include the VAT ID (or tax ID) of both businesses.
This is not necessary if your business is located in the US, Canada, or Asia.
When making your digital invoice, go over these details twice to ensure everything is correctly written, as you might need to contact your client later on, for which you’ll need the right contact information.
#2. Date and Unique Invoice Number
After filling out the contact information, you need to give your invoice a unique number. An invoice number is important because some clients won’t accept an invoice without it. Besides that, it’ll also make it easier for you to keep track of your invoices.
One of the best ways to number your invoices is to use a chronological order and include dates. For example, if you’re writing your first invoice for 2023, the number should be “23001”. Here, “23” represents the year, whereas “001” stands for the order of the invoice.
#3. Description of the goods or services
Next, you must list all of your services or products that you’re providing to the client, so they can have a crystal clear picture of what they’re paying you for. To organize this section optimally, you should:
- Add a line for each product or service
- Specify the rate you expect
- Add the quantity (if necessary)
#4. Payment Details
Here, you need to specify how, when, and how much you expect to be paid.
You should add your credit card number, PayPal email, and other payment information your client can use to send you money. Then, write down the total amount of money you require for your work, and add the invoice due date.
If you’re offering your client a discount or a credit such as Net30, you can add it to this section.
To minimize the chances of getting any late payments and to make it easier for your client to pay you, include as many payment options as possible. On top of that, it’s also advisable to add a fee in case the client doesn’t pay the invoice on time.
#5. Additional Notes
Although it might seem like a minor section of a digital invoice, the “Additional Notes” section is key to preventing any miscommunication between you and your client. In it, you should provide any details you think are necessary regarding your services or products.
For example, if you have agreed to receive the payment through your bank account, you can include the bank details in this section.
You can also add a “Thank you” note as a sign of appreciation for working with your client and to add a friendlier tone to your invoice.
How to Make a Digital Invoice Step-by-Step
To make a digital invoice, you can use software such as Word or Excel and write the document from scratch. But, this method can be time-consuming and difficult, especially if you have no previous experience.
We don’t recommend making a digital invoice on your own as you can easily miss out on some crucial details. Fortunately, there are far better solutions!
Namely, the best way to make a digital invoice is to use an online invoice generator. With this tool, creating a digital invoice is a piece of cake and only takes a couple of minutes.
Here’s how it works:
- Open our free invoice maker
- Fill in the required details
- Preview your document
Once you’re done, you’ll be able to instantly download your digital invoice and store it safely or forward it to your clients via email.
- A digital invoice is usually in PDF format and, like your regular invoice, lists the services or products you’re charging your clients for.
- The biggest difference between an electronic and digital invoice is that the former is processed by the computer, whereas the latter can be manually read by the recipient.
- Typically, a digital invoice includes your and your client’s contact information, payment details, description of your goods and services, etc.
- The easiest and most efficient way to make a digital invoice is to use an online generator.
At the end of the day, switching to digital invoices is the way to go if you want to save time on paperwork and make your invoicing process much simpler. Hopefully, this article has provided you with all the important information to help you make the transition seamlessly!
If you want to make digital invoices the easy way, be sure to use our online generator. Besides invoices, we can also provide you with tailor-made pay stubs, 1099-MISC forms, and other legal documents!