Invoicing is one of those business practices that can seem simple until you start. The whole process, from choosing the details to include to deciding how and when you send invoices and how you follow up, can have a major impact on your cash flow and your client relationships.

Different types of businesses also have different invoicing needs: a freelancer who works on short-term projects will likely handle it differently from a construction firm that bills in phases or a subscription-based company with recurring charges. Some industries rely on automation to manage dozens (or thousands) of invoices at once, while others favour a more hands-on approach. The goal is to clarify what you’re owed, make it easier for clients to pay, and ensure your invoicing system fits your business and your clients. Below, we’ll look at exactly how that’s done.

What’s in this article?

• What is the invoicing process?
  
• What information should every invoice include?
  
• How can businesses make invoicing easier?
  
• What are common challenges in invoicing for businesses?
  
• How can Stripe help businesses manage invoicing?
  

What is the invoicing process?

First, assure that you and the client have agreed on the terms, including the scope of work, pricing, payment terms, and deadlines. Document these details in a contract or purchase order to avoid misunderstandings later.

Next, draft the invoice. Include as much information as possible about unit prices, total amounts due, payment terms, both parties’ contact information, and anything else required for compliance. Review the draft for accuracy and ensure all the details match the original agreement. Even small errors can slow down payment or create unnecessary back-and-forth.

Send the invoice promptly through email, an invoicing platform, or post. Include any supporting documentation you might have, such as receipts and time sheets, so the client can review and verify the charges. After the invoice is delivered, monitor it to confirm it’s been received and is moving through the client’s payment process. If payment isn’t made by the due date, follow up with a polite reminder.

Once payment is received, update your books and send a receipt to the client to confirm the transaction. Periodically reconcile invoices against your financial records.

What information should every invoice include?

Every invoice should be comprehensive and easy to understand. Here’s the information you should include:

• Business information: Your business name (or your name if you’re a sole proprietor), address, contact details (phone number, email, or both), and Tax Identification Number (TIN), if required by your jurisdiction

• Client information: Your client’s name or business name, address, and contact details for the individual or department that handles payments

• Invoice details: A unique invoice number, the date issued, and the payment due date

• Description of goods or services: A detailed, itemised list of products sold or services rendered, plus descriptions and quantities for each item

• Pricing information: Unit prices, subtotals, any applicable taxes, discounts, or additional fees, and total amount due

• Payment terms: The time frame to pay (e.g., “net 30”), payment methods accepted (e.g., bank transfer, credit card), and late payment terms, if applicable

• Additional notes or attachments: A short thank-you message, account details, or project references, as well as any supporting documents (e.g., receipts, time sheets)

How can businesses make invoicing easier?

To make invoicing less burdensome, focus on creating a system that minimises the effort for both you and your clients. Here’s how.

Set expectations early

Before the work starts, ensure you and the client agree on pricing, payment timelines, and what happens if payments are late. Then, put it in writing. The fewer surprises there are, the smoother invoicing will be.

Automate where you can

Use software to create reusable templates, schedule recurring invoices, and send reminders automatically to save time and reduce the risk of human error.

Think about your client’s process

Some clients need a purchase order number, while others might require invoices to be sent to a specific department. Ask up front how they prefer to receive invoices and what details they need. Adjusting your invoices to accommodate their systems can speed up approval.

Invoice immediately

Procrastinating on invoicing can affect your cash flow and makes it more likely that clients will forget. Send the invoice as soon as a project is completed or a milestone is reached. The fresher the work is in the client’s mind, the faster they’re likely to pay.

Make payments easier

Accept multiple payment methods and include clear instructions so clients can complete the payment without additional follow-up. If you accept payments by bank transfer, include your bank details. And include an address if you accept checks. For online payments, provide a payment link.

Track Invoice status

Keep organised records of invoices sent, due dates, and payments received. If a payment is late, follow up politely but firmly. A quick email or call is often all it takes.

Review and improve your process

If certain clients are always slow to pay or you’re spending too much time on administrative work, figure out why. Maybe you need stricter terms or more effective tools. A little reflection can save you a lot of time and effort.

What are common challenges in Invoicing for businesses?

Invoicing comes with plenty of challenges. These are the most common Invoicing issues businesses face.

Late payments

Even with clear terms, late payments are common: in 2022, almost 90% of businesses reported experiencing overdue invoices. The client might have cash flow issues, or invoices might get buried or stuck in approval processes. Whatever the cause, late payments disrupt your cash flow and create more work chasing overdue invoices.

Charge Disputes

Clients might question the work delivered, the scope, or even the agreed price. These disputes often arise when there’s a gap between the initial agreement and the invoice details. This can strain relationships and further delay payments.

Incomplete invoices

An invoice that’s missing details such as purchase order numbers or one that’s not properly formatted can also create delays. Some clients have strict invoicing protocols, and if you miss even one step, your invoice might be rejected or shelved indefinitely.

Inconsistent processes

Without a standardised system for creating, sending, and tracking invoices, details can get lost, follow-ups might be forgotten, and invoices could go out late. This can lead to missed payments and unnecessary confusion.

Multiple payment terms

If you have different clients with different terms (e.g., 30 days, 45 days, milestone payments), it can be tricky to keep track of when invoices are due.

International payments

Invoicing is more complicated for businesses with international clients. Exchange rates, tax laws, and compliance requirements vary by country, and making mistakes can result in underpayment or delays while you make corrections.

Lack of transparency

Sometimes, businesses don’t know where their invoices stand. Is the invoice sitting in a client’s inbox, being reviewed, or lost entirely? Without visibility, you might follow up at the wrong time or in the wrong way.

Manual follow-ups

Every minute spent sending reminders or making calls to track down payments is a minute taken away from important work. When you handle follow-ups manually, you create a hidden cost that can add up, especially across multiple accounts.

Recurring clients who overlook invoices

Your regular clients might start to overlook invoices, particularly when they arrive at the same time each month. They might assume everything has stayed the same or simply forget to process them.

Overreliance on big clients

If a major client delays payment, that can put substantial strain on your business. When too much of your revenue depends on just a few clients, their payment habits – or lack thereof – become a much bigger issue.

How can Stripe help businesses manage invoicing?

When it comes to invoicing, Stripe can automate internal processes, improve payment collection, and provide flexibility as your business grows. Below are some of the many ways Stripe can simplify invoicing.

Invoice creation

Stripe Invoicing can automatically create professional, detailed invoices. Businesses can:

• Use templates to standardise their invoices
  
• Prefill details such as customer information, pricing, and tax calculations
  
• Automate recurring invoices for subscription-based or repeat customers
  

This minimises manual errors and saves time, which is particularly important for businesses with high invoice volumes.

Payment collection

Stripe invoices come with built-in payment options so customers can pay directly from the invoice. This simplifies the payment process and speeds up collection. Stripe supports numerous payment methods, including:

• Credit and debit cards
  
• Automated Clearing House (ACH) transfers
  
• International payment methods such as SEPA Direct Debit and Alipay
  

Payment tracking

Stripe automatically tracks the status of invoices – whether they’ve been sent or paid or are overdue. This transparency helps businesses:

• Know when to follow up with clients
  
• Avoid extraneous communication
  
• Keep payment records organised without extra effort
  

Automated follow-ups

Stripe can automatically send reminders to clients for overdue invoices. You can customise the schedule for when these reminders go out to maintain control over the follow-up process without spending more time on manual reminders.

Payment terms

Stripe Invoicing empowers you to customise the payment terms and conditions to fit your needs, with options for payment plans, partial payments, discounts, or late fees. This is especially useful for businesses that manage long-term client relationships or high-value invoices.

International payments

For businesses that operate internationally, Stripe manages complexities such as:

• Multi-currency invoicing with real-time currency conversion
  
• Automatic tax calculations, including value-added tax (VAT) and goods and services tax (GST), through Stripe Tax
  

This functionality mitigates the administrative burden of working across borders.

Recurring billing and subscriptions

Stripe’s subscription tools integrate with its invoicing features, which means businesses can:

• Automate recurring charges
  
• Adjust charges mid-cycle (e.g., prorating upgrades or downgrades)
  

Customisable workflows

Stripe integrates with a wide range of business tools such as accounting software, customer relationship management (CRM) systems, and enterprise resource planning (ERP) platforms. This ensures that invoicing works as part of your broader workflow for reporting, client management, or tax compliance.

Invoice insight

The Stripe Dashboard provides valuable analytics on invoice performance, such as:

• Time to payment after an invoice is sent
  
• Trends in late payments
  
• Customer payment preferences
  

This insight can help businesses identify patterns and refine their invoicing practices.