What is an invoice number and how to assign one?

What is an invoice number?

An invoice number is simply a unique record number assigned to each invoice you issue. This number can be automatically generated by invoicing software, if you use it, or you can manually create one when issuing the invoice.

Invoice number meaning is subjective, and generally acts as a form of record for the vendor and the customer. You can use these as references for billing questions, income tracking and taxes later on. They define an invoice and assign it to a specific purchase at a set time in your shop’s history.

Beyond being a simple reference to look back on later, an invoice number can also apply to certain payments — such as tabs that remain open or goods that may have been purchased under a discount.

An invoice number example could include different letters or numbers, all of which are searchable using your filing system or software. After you input these numbers, you can pull up a client record and view purchasing histories, goods and services purchased and specific line-item information. This can be an invaluable help during billing disputes or customer service inquiries.

How to assign an invoice number

There are no particular financial regulations you need to heed when it comes to creating a numbering system for your invoices, but it is advisable to have a clear and consistent system that works for you. Here are some standard practices:

• Use company letters as an identifier. For example, the letters “PPS” could be used for Pigment Paint Studio, followed by the invoice number, such as PPS-0001. This would represent the first invoice issued to Pigment Paint Studio.
• Assign numbers to clients or companies. The first invoice for the client that has been designated as number 422, for example, would be written as 422-0001.
• Use the date the invoice was issued, such as January 1, 2021. This method would be written as 01012021-0001, 01012021-0002, and so on for all of the invoices issued that day.

Choose a numbering system that makes the most sense for your business, and remember to keep each invoice sequential to avoid any confusion. Start with invoice “0001” and continue your numbering from there.

Although there aren’t strict rules for invoicing, adopting a sequential (or consecutive) invoice numbering system is one of the simplest ways to keep your invoices organized, helping you avoid duplicate numbers and typos. It's one of the best ways to invoice your customers.

No matter what method you choose, it’s advisable to steer clear of generic terms that might not be tailored to specific clients in your invoice numbers.

For instance, if you offer consulting services to various clients, an invoice number like Consult1001 is not very specific and could appear for multiple invoices across different customers.

Why are invoice numbers important

Numbering your invoices is beneficial no matter what type of invoice you're sending out. In fact, it’s a vital part of business recordkeeping.

As a freelancer or business owner, invoice numbers are useful for both accounting and payment tracking purposes, especially if you issue multiple invoices each month.

An invoice number is helpful for your clients, too. They can reference these numbers in their own internal accounting systems to indicate that particular funds allocated were for a particular purpose, as documented by a particular invoice.

Another reason why invoice numbering is important for your business is simplifying taxes and accounting. When you manage multiple projects and clients each year, it becomes essential to keep track of how many customers you’ve billed and the income you've earned. Sequential invoice numbers provide a clear record of how many invoices you've issued over a specific period and the corresponding amounts.

This information is especially helpful for your accountant and during tax season. You'll have a precise account of the number of jobs completed and their value, simplifying the process of calculating your revenue and income, as well as tracking payments received.

Invoice number tracking

Whether you're using invoicing software or manually updating an invoice template for each client, follow these best practices to make tracking your invoices quick and easy:

• Ensure that invoice numbers are clearly visible and easy to identify on each invoice.
• Maintain a digital record of every invoice you send, preferably in PDF format.
• Choose a numbering system and apply it consistently to maintain uniformity.

If you're using invoicing software to generate an invoice template, the software will most likely create an invoice number too. You can use the auto-generated one or you can modify or replace it. As far as tracking goes, the software can tell you when a payment for a specific invoice or invoice number is overdue.

That's another reason why you should use invoice numbers only once, even if you’re invoicing different clients.

With Acrobat Sign, you can integrate invoices into your workflow as well as collect electronic signatures that help you get paid faster.