This guide can give an adequate amount of information regarding the assigning of invoice numbers and invoice number format. Every business organization generates invoices that need to be sent to various customers that will include many details, including the list of goods or services purchased and the price and quantity. Moreover, an invoice will consist of an invoice number, date, signature, etc.
Read the following to understand what an invoice number and invoice number format are.
What is an Invoice Number, and why it is used?
- An invoice number is just a number mentioned on the invoices to mark them, which helps in tracking the business transaction quickly and easily.
- No matter with whom you are doing your business, the invoice number is essential, especially if you are dealing with a recipient in any other countries with strict invoice regulation, then providing an accurate invoice number is crucial.
- Moreover, a correct invoice number can avoid any legal problems as each country determines the taxation and VAT laws.
- Every invoice will have different consecutive numbers that help in ensuring each invoice is distinctive, and using the invoice number, the employee of the organization can organize every business transaction.
- At the same time, the transaction can be referenced for all accounting purposes and customer support.
- An invoice number can also help in eliminating any duplicate payments, which can avoid huge losses for the company.
- An invoice is usually generated to ask for the payment for the purchased products or services and a receipt is used as proof of payment.
Significance of Invoice Number format
When it comes to the invoice number format, it is up to you to choose how you want to assign them according to your convenient method. But you must make sure that the number format you follow should be easy to file and it should be with the numbering system by avoiding any gaps or skips in the order.
Some of the most commonly used invoice number format is in chronological order, by customer number, by project number and sequential. If you are using accounting software, then the invoice numbering system will be in sequential numbering as default. It is significant to add the name of the customer and the price on the invoice when you enter the invoice number, for quick reference.
Tracking invoices becomes extremely difficult when you are dealing with a vast number of orders. But if your invoice number format is in chronological order, then tracking the invoices by the dare becomes easier. While you add invoice numbers according to the customer number, you can decide to include the date or not.
If you add the date or exclude it, the number will always start with the customer number followed by the date and the sequence number. Whichever structure of invoice number you choose, the sequence number should always come at the end. The advantage of doing this is to find and differentiate from the others in its sequence.
In case if you are not adding the date along with the invoice number, make sure that you add more digits to the sequence number. This can avoid running out of sequence choices.
Another way to assign the invoice number is based on the project number. This type is used by companies who take projects where the number is a vital reference for their work.
Such invoice numbers will include the project number, customer number, and sequence number.
You can choose any system mentioned here for numbering your invoices, but the system should correspond to your needs. Only then you will be able to locate the invoice easily for reference. If you are using accounting software, then a majority of the headache of creating and assign the invoice number can be reduced.
How to generate an invoice number and assign them with examples?
As mentioned above in this article, there isn’t any single standard invoice numbering method. Every business has all the right in choosing the best numbering way based on their convenience. Below you can find the four numbering formats used by businesses generally.
- Personalize Invoice Numbering using myBillBook
myBillBook can help you produce the invoice numbers automatically. It is possible to choose your prefix and starting number by enabling the toggle. See the steps given below:
- First, log in to myBillBook
- Click on the More icon
- Choose Settings
- Click on the invoice and select Numbering
- Now it is time to enable the Toggle. It will automatically generate the number when generating the invoices
- Then set the Prefix as Static Text or you can choose Year of Invoice Date
- You will be able to set any custom text according to your preference in the Static Text
- If you select the Year of Invoice Date, the present year will be updated automatically in the system
- If you have selected the Prefix as the Year of Invoice, you will be able to view the Rest at the beginning of the year
- Now you have to set the Reset at the start of the year by enabling the Toggle
- Click on the Start With button to set the starting number of the invoice.
- You can now create the invoices and view the invoice number you have customized
- If Static Text is designated, then you can see the number produced with the stated text and Start with a number. But if the Year of the Invoice Date is chosen, then you can only view the created number with the year and start with a number.
- Project-based Invoice Number
This is the last type of invoice numbering system which is used by businesses who take many projects or for whom the project number is very important. The two ways of project numbering include the following:
- project number + customer number + sequence number = ABCXYZ303- 1265-01
- customer number + project number + sequence number = 1265- XYZ303-01
- Customer Invoice Numbering
The number will begin with the customer number, followed by the date (optional) in the customer invoice numbering system, and it ends with the sequence number. An example of this numbering system with 4035 as customer number on Dec 29th, 2019 is 4035-001 or 4035-20191229-001.
- Chronological Invoice Numbering
The chronological method is a way to create longer and more detailed invoice numbers. In this invoice numbering system, the date on which the invoice was created is added.
For example: if the invoice was generated on Dec 28th, 2020, the invoice would look like 20201228 – 001. The invoice no format will be YYYYMMDD-001.
In the example shown above, the first part is the date and the second part is the order number which will go up after every new transaction.
You can even use another format of the chronological system, which is DDMMYYY and MMDDYYY.
- Sequential Invoice Numbering
This is an invoice numbering system where the numbers move up by one with every single invoice you create. You can start with entering invoice number 1, followed by 2, 3, 4, 5, etc., for the upcoming invoice. It is also feasible to enter the invoice number as 00001, 00002, 00003, and so on. But the most common sequential invoice numbering is given as 0000000001 (9 zeros followed by the digit).
If you do not have accounting software, you will have to enter the invoice number manually, so always write the customer’s name and amount owed in separate sheets. The advantage of entering these details in separate sheets is to check this information in the future if any typos or duplication error occurs.
But if you are creating an invoice using accounting software like myBillBook, then the invoice number is automatically assigned for every new transaction. The software will not allow any duplication, even if you try to enter one.