How to Format Invoice Numbers
Every invoice your business creates must include a unique invoice number. They’re crucial for bookkeeping and tax purposes but also to help you keep your documents organized.
Although you can format your invoice numbers in any way you want, they need to be in sequential order and cannot contain any repeated numbers or gaps.
This article explains how to format your invoice numbers, provides some examples, and explains how to automatically generate them using invoicing software.
Invoice numbers are a mandatory invoice field that are normally displayed at the top of the invoice under the invoice date. They’re a unique identification number that helps both your customer and your business locate the correct document. Plus, they can be used to make your invoicing processes easier to monitor and sort.
They also help your accountant keep accurate records of your sales and makes reconciling payments simpler. The tax authorities in your state may request to see your invoices to ensure that they are compliant and contain a correct numbering sequence.
It’s up to each individual business to determine an invoice numbering sequence that would work best for them. Most business advisors and accountants would recommend including the year in the sequence to make it easier to determine which financial year they relate to.
Some examples of common invoice number formats include:
2021-027: This refers to the 27th invoice issued in the year 2021.
2021/INV/017: This refers to the 17th invoice issued in the year 2021. “INV” stands for invoice to differentiate it from other sales documents such as quotes.
2021/19/06-001: This refers to the first invoice issued on the date June 19, 2021. This format would be beneficial if your business issues several invoices per day.
2021/02-003: This refers to the 3rd invoice issued in February 2021.
007: This refers to your 7th invoice issued. We recommend including the year in your sequence, but if you only issue the occasional invoice, you can exclude the year if you’d like.
Regardless of the format your business chooses, it should be easy to remember and understand. Your invoice numbers can contain numbers, letters, and special characters.
Finding software that automatically generates your invoice numbers will ensure that your invoices are always compliant and help you avoid costly mistakes incurred from manual entry.
Invoicing software can be a helpful tool in this process. It will automatically detect the next number in the sequence so you don’t have to worry about it.
If your business uses Microsoft Word or Excel, you’ll need to manually enter or check the invoice number on each invoice you create. With Excel, you can use a formula to automatically fill in the next number but it’s recommended that you always check if it’s correct.
Since the tax year is the same as the calendar year, you should change your invoice number for the first invoice you create each new year. This is especially important if you include the date in your invoice numbering sequence.
If you accidentally issue an invoice with an incorrect or duplicate number, you’ll need to rectify this as soon as possible. Unfortunately, once you’ve sent the invoice, you can’t just change the invoice number and re-issue it.
The correct procedure would be to cancel the incorrect invoice with a credit memo. Then, you’ll need to create and send a new invoice with the correct invoice number.
When issuing an invoice payment receipt to a customer, it’s recommended to include the invoice number, but not mandatory.
The recommended payment receipt fields include:
Your business name and address
The invoice number
The date the payment was received
The amount paid
The remaining balance owed (if applicable)
If you issue several invoices to the same client, including the invoice number on the payment receipt will help them determine which invoices still need to be paid.
With SumUp Invoices, you can create invoices for free. Our simple invoice template helps you create an invoice in less than 1 minute, and the software automatically generates the invoice number for you.
The software uses machine learning to automatically detect the next number in your numbering sequence and ensures that there are no duplicates or gaps.
You can also set up invoice payments by automatically including a payment link on your invoices so your customers can pay instantly with a credit card.