Invoicing 101: How to number invoices.
Not sure of the best way to organize your billing? Learn how to number invoices and stay on top of your business accounting.
Learning how to create or number your invoices properly is a basic yet important part of keeping financial records in order. Doing so helps keep track of your business accounting for what’s been paid and what hasn’t.
But what exactly is an invoice number, and how do you create one? Whether you’re new to business invoices or looking to expand your processes, let’s explore everything you need to know about invoice numbering.
What is an invoice number?
Invoice numbers are the second-most important number on an invoice — after the amount due, of course. They’re unique identifiers that make it easy for your team to search invoices on a computer or find copies in a filing cabinet and help ensure everyone stays on the same page.
Benefits of learning how to number invoices properly.
Numbering invoices correctly has numerous advantages. As one of the best ways to invoice customers, this method helps you track payments, avoid paying the same bill multiple times, and keep your records tidy for tax time. Let’s explore some of the benefits:
- Improved payment tracking. Numbering makes invoices easier to identify and follow up on unpaid invoices.
- Single payment. Unique invoice numbers prevent the risk of processing the same payment twice.
- Adaptable. Customized numbering fits various project or team needs and help with organization and management.
- Simplified tax documentation. Proper numbering keeps your paperwork orderly for easy, accurate tax filing.
- Better financial reporting. Organized invoices simplify compiling financial reports and assessing the health of your business.
How to number invoices using different methods.
Although numbering is an essential part of the many different types of invoice processes, there’s not one “right” way to do it, even with invoices like pro forma invoices that don’t necessarily need to be numbered. Here are some of the most common methods businesses use to determine how to create an invoice number:
- Sequential. Each new invoice number is one digit higher than the previous number. For example, if you start with invoice number 0000001, the next invoice created would be 0000002. This number order is the default method for most accounting software.
- Chronological. Invoice numbers are based on the date created. For example, an invoice created on September 29, 2022, could be numbered by year, month, and date: 20220929-001. (Since you’ll likely create more than one invoice per day, you should always include a sequential number following the date.) Chronological invoice numbers easily show you the date of the invoice at a glance.
- Customer or project number. Assigning invoice numbers based on established customer or project numbers helps you track invoices for specific clients or projects. For example, you could assign Client A with invoice number 1234 — the first invoice would be 1234-001, the second invoice would be 1234-002, and so on.
- Alphanumeric. This method combines letters and numbers to provide extra flexibility and information. For instance, you might use a prefix that denotes the type of service or product, followed by a sequential number, such as SRV-001 for services or PRD-001 for products.
Many businesses combine several methods to stay organized. If you wanted to combine all three numbering methods, you could create an invoice for customer 1234 on September 29, 2022, represented as 1234-20220929-001.
How to create an invoice number manually vs. automatically.
Invoice numbers can be created manually or automatically, and each has its own process and benefits.
Creating invoice numbers involves manually adding them to each invoice as you create them, usually at the top of the document, PDF, or spreadsheet. Adding numbers individually requires you to keep track of the numbers, making sure each new invoice increments correctly from the last. Although this process is simple and direct, it is prone to errors — especially as the volume of transactions grows.
Meanwhile, automatic systems generate the invoice numbers for you. These systems can be customized to follow specific sequences or patterns and apply an invoice number to each new invoice. This method makes sure the information is accurate and consistent and is ideal for businesses with frequent invoicing needs.
Which invoice numbering method is right for you?
Ultimately, there’s no “best” way to number invoices. The best method depends on which method works for your business. When choosing the right method, consider a few key aspects:
- Volume. Higher business volumes might require or benefit greatly from using an automated system to avoid errors and save time.
- Complexity. If your business operations involve multiple projects or clients, a more detailed system could be beneficial.
- Compliance. Make sure that the method you choose aligns with any industry-specific regulatory requirements.
Once you determine which method you prefer, you can start numbering and sending invoices to clients and easily stay on top of billing.
Tools to streamline client invoicing for your business.
Take a moment to learn more about how you can use tools to create and edit PDF invoices. Discover everything you can do with Adobe Acrobat for business.