What Is an Invoice Number?
For any organization or vendor, an invoice usually documents financial sales, purchases, and related transactions. The invoice number is one of the essential components of an invoice. It ensures that every credit or debit from the company is well documented. Not only does it help track payments, but it also makes tax and audit calculations easier.
Below, we’ll cover:
- What Is an Invoice Number?
- Why Is an Invoice Number Important?
- Do Invoices Need an Invoice Number?
- What Invoice Number to Start With?
- How To Generate An Invoice Number?
What Is an Invoice Number?
An invoice number is a unique, sequentially generated number assigned to invoices. Businesses usually generate these invoices for their clients. This number is mentioned clearly on the invoice page. Without this number, the invoice is invalid and cannot be considered as a legal document for purchase.
The presence of the invoice number makes every bill unique to refer back to purchases later. In addition, it comes in handy for tax and computation purposes. Also, the invoice number does not necessarily have to be a set of digits alone. It can also include a series of alphabets in association with the numbers to make it unique.
Why Is an Invoice Number Important?
Invoice numbers are essential components of every invoice. It is the ideal method to keep track of business transactions. In other words, when you have invoice numbers listed out on all bills, you can track these purchases and sales at a later date to make your computations.
When each bill has a unique invoice number, what are some of the pieces of information that are available from it? An invoice number can help you fetch data like - transaction date, the details of the transaction, the quantity and costs involved, and whether payment has been made or not. It allows the business to reference the invoice with its number to keep everything updated.
Do Invoices Need an Invoice Number?
The answer is yes; every business needs to incorporate invoice numbers in their bills. Why is this so? For starters, a bill without an invoice number is legally invalid. Hence, there are high chances that the transaction will not be held valid without a legitimate bill.
Secondly, if you provide your clients with a bill without a unique number, they have the right to reject the invoice and the transaction. This is primarily because such invoices are not valid, making it impossible for them to cross-refer these bills later. As a result, you would end up reissuing the same bill again if the client rejects the invoice without a number. It is imperative to include an invoice number in the invoice.
What Invoice Number to Start With?
Invoice numbers do not have to follow any state regulations or federal laws with respect to its contents. The number is valid as long as they form a part of the unique, ordered sequence within the company. Also, it can have a mix of numbers and alphabets to keep it unique. Here are some ideas that can help you make unique invoice numbers:
Use an identifier pattern
It is often a good idea to include the initials of your company’s name within the invoice number. For instance, if you are called XYZ Limited, you could start your invoices with XYZ001. This helps when you invoice companies with a large number of suppliers and vendors. It also helps distinguish you from the other vendors.
You could also develop invoices, including the initials of your client. Finally, you could also incorporate the date to build a complete invoice. For instance, the invoice for XYZ Limited could be XYZ061218 if the transaction took place on June 12, 2018.
Follow a sequence
It is imperative that you maintain your invoice numbers in an ordered sequence. For instance, the numbers should always start with 001 and not 011. This helps maintain parity.
How To Generate An Invoice Number
More often than not, the invoicing software you use will generate invoice numbers on their own. All you have to do is insert the right fields and important information, and you are good to go.
Along with the invoice, the software will provide you with the invoice number as well. This helps the system to identify each invoice and thus transaction uniquely. If you have to cross-refer these invoices for issues like overdue payments, you can do that with ease, owing to the unique identifying number.
Is the invoice different from a receipt?
An invoice is issued by the vendor to indicate that the payment is due, while the receipt is proof of payment made.
Can you use the same invoice number for different clients?
No, the invoice number has to be unique across the vendor and not specific to the client. No two invoice numbers even for the same company can be the same.
When can I change the invoice number series?
If you are looking to change the series of numbers for invoice numbers, it is best to wait for the next accounting year. This removes the chances of duplications and avoids confusion.
Can invoice numbers be deleted?
As a rule of thumb, invoice numbers must never be deleted. Later, during financial audit and reconciliation, this deleted number could indicate a gap in your financial records.
Most of the requirements of an invoice number are taken care of by appropriate invoice generators. WeInvoice is a reputed name in the invoicing industry. We have a host of invoice templates to choose from that cater to different sectors and work spheres. Every invoice developed through WeInvoice is distinct, with a unique invoice number for future references.