What is an itemised bill and why do you need it?

Invoicing
Invoicing

Stripe Invoicing is a global invoicing software platform built to save you time and get you paid faster. Create an invoice and send it to your customers in minutes – no code required.

Learn more 
  1. Introduction
  2. What is an itemised bill and how does it differ from a standard bill?
  3. What information should be included on an itemised bill?
  4. How to create an effective itemised bill for your business
    1. Business information
    2. Invoice number and date
    3. Line items
    4. Additional fees, taxes, and discounts
    5. Subtotals and grand total
    6. Notes or special instructions
  5. Benefits of using itemised bills for businesses and customers

When it comes to prioritising transparency in billing, few tools are as valuable as an itemised bill. Itemised bills outline exactly what goods or services customers are paying for and can help reduce their frustration and minimise payment disputes and delays. A lack of transparency in billing is a common concern that can cause serious problems: one 2022 survey found that almost 40% of Americans were confused by their medical bills. For businesses in healthcare, hospitality, or any service-based industry, strong itemised billing practices can lead to major benefits.

Below, we’ll explain what an itemised bill is, how to create one, and what benefits it offers business and their customers.

What’s in this article?

  • What is an itemised bill and how does it differ from a standard bill?
  • What information should be included on an itemised bill?
  • How to create an effective itemised bill for your business
  • Benefits of using itemised bills for businesses and customers

What is an itemised bill and how does it differ from a standard bill?

An itemised bill is a bill that lists each product or service provided and the specific cost of each item. Although a standard bill might provide only a total amount due or general categories without listing individual services or products, an itemised bill shows each item or service line by line with its price, often alongside a description and quantity.

This provides transparency and makes it easier for the customer to see where each cost is coming from. Itemised bills are frequently used for medical bills, hotel receipts, legal services, insurance claims, and restaurant bills. Standard bills are typically used for flat-rate services or small purchases where individual item details aren’t as important.

What information should be included on an itemised bill?

An itemised bill should include specific details about each charge in the total. It usually contains:

  • The date when each service was provided or each product was purchased

  • The name and description of each item or service

  • The quantity of each item or service (e.g. two office visits, five hours of labour)

  • The cost per unit of each item or service

  • Line-item total (quantity × unit price)

  • Any additional fees (e.g. service charges, delivery fees)

  • Any taxes

  • Any discounts or adjustments

  • The subtotal before any additional charges, discounts, or taxes

  • The total amount due

  • Billing information – usually the provider’s name, contact details, and billing address

How to create an effective itemised bill for your business

To draft an effective itemised bill, you need to include all the important information for both your client and your business. An invoicing and billing tool can save you time and help you create bills that look more polished. Stripe Invoicing lets you quickly create and send bills from your Stripe Dashboard without needing any additional software. Here’s what to include on these bills and how Stripe can help.

Business information

Include your business name, logo, address, phone number, and website. This makes it easier for clients to contact you. With Stripe, you can customise your bills with branding elements such as your logo and brand colours so every bill has a cohesive look.

Invoice number and date

For tracking purposes, assign each bill a unique number and include the date. Stripe automatically generates the invoice number and date – and if you need a custom numbering scheme, you can tweak it in the settings.

Line items

List each product or service separately with a short description, quantity, unit price, and total cost. In Stripe Invoicing, you can add multiple line items, each with its own description and pricing.

Additional fees, taxes, and discounts

If there are extra fees (e.g. delivery charges, special services), list them on their own line so they don’t get lost in the details. List any taxes (both the rate and the total amount) and discounts. With Stripe Invoicing, you can add custom line items for extra fees, apply coupons or discounts, and automatically calculate taxes based on the customer’s location.

Subtotals and grand total

Provide a subtotal before taxes, fees, or discounts, then add those in and show the grand total at the bottom. Stripe automatically calculates the totals as you add them.

Notes or special instructions

At the bottom of the bill, you can add a thank-you note, reminder, or specific instructions related to the bill. With Stripe, you can add a memo or footer for this kind of personalisation.

Benefits of using itemised bills for businesses and customers

Itemised bills clarify what each charge is. Here are some ways itemised billing benefits businesses:

  • Service value: For service-based businesses, itemised billing helps demonstrate the value of each individual service.

  • Clarifications and disputes: Breaking down each charge can help reduce the reasons for customers to question the bill. This can minimise unpaid bills and improve payment speed.

  • Compliance and documentation: In industries such as healthcare and legal services, itemised bills are often required for compliance or insurance claims. For example, a law firm will need to show itemised bills for reimbursements or audits.

  • Sales and marketing data: Businesses that track individual items on bills – whether they’re products or services – can gain insight into consumer preferences. For instance, a consulting firm might notice that clients often request strategy sessions with implementation packages.

  • Tax reporting and deductions: Businesses can quickly separate deductible services and supplies on itemised bills to classify expenses when they file taxes or prepare for audits.

  • Flexibility: With itemised billing, businesses can easily customise bills for specific client requests. For example, a designer can list the individual design elements (e.g. logo, website, brand guide) purchased by each client.

Here are some of the benefits of itemised billing for customers:

  • Pricing transparency: When customers see an itemised breakdown, they understand exactly what they’re paying for. For instance, in a medical bill, customers will be able to look at charges for each test and procedure to understand what their payment covers.

  • Reimbursements: Clients need itemised bills if they request reimbursement for costs such as corporate travel expenses and insurance claims.

  • Budgeting and financial planning: Itemised bills make it easier for clients to manage their budgets, especially for recurring services. For example, if a client uses a monthly home cleaning service, seeing separate charges for basic cleaning, laundry, and deep cleaning services can help them adjust future bookings based on their budget priorities.

  • Dispute resolution: It’s much simpler to address an issue with one part of a bill if the charges are clearly separated. For instance, if a client disputes a “Consultation Fee” on an itemised bill, they can ask about that single line item rather than questioning the entire bill.

  • Tax deductions: For customers who track expenses for tax purposes, itemised bills make it easier to identify deductible costs. For example, a freelancer could use itemised bills from business meals or travel to separate entertainment charges from professional expenses and make the appropriate deduction.

The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accuracy, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent lawyer or accountant licensed to practise in your jurisdiction for advice on your particular situation.

Ready to get started?

Create an account and start accepting payments – no contracts or banking details required. Or, contact us to design a custom package for your business.
Invoicing

Invoicing

Create an invoice and send it to your customers in minutes – no code required.

Invoicing docs

Create and manage invoices for one-time payments with Stripe Invoicing.