Is there any guideline for invoice numbering?

Question

If I create an invoice for client1 with invoices numbered 0001, 0002, 0003, then do I start invoicing client2 with invoice numbered as 0004 or 0001? I'm assuming that there would be some logic behind creating invoice numbers.

Also, if I invoiced client1 with invoices numbered 0001 to 0014 during a financial year, do I start with invoice 0001 for the same client during the next financial year?

Let the answer not be specific to any country, but if the tax laws of the country are relevant, I'm from India.

Answer 1

With invoices, the important part is that they are unique across your company - in this case, you.

• Invoice 0001 belongs to Client A;
• Invoice 0002 belongs to Client B;
• Invoice 0003 to Client A (repeat customer);
• Invoice 0004 belongs to Client C

etc.

When you receive documented payment (i.e. a cheque or e-Transfer) where there is a memo field, 99% of the time the memo contains the Invoice #, which is unique just for you. This helps with tracking which invoices are paid, and which are not.

Answer 2

There aren't really any rules exactly. But there are some general guidelines....

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All invoices should have a completely unique number. Never repeat a number for any reason. You should start with a number and go up, never repeating any number. Invoice numbers should not be "customized" for a client specifically. But you can use some clever values if they will assist you.

For example.....

I like to use the last 2 digits of every invoice as the year it was sent.

So this year I use...

• #0505520
• #0505620
• #0505720
• ....
• ....
• #0532120
• etc....

I know the last two digits are always the year. So I can find invoice 5056 which was sent in 2020 easily. Next year all my invoices will end in "21". Last year they all ended in "19".

This allows me, at a glance, to know what year the invoice was created. This helps to merely know when any project was completed or worked on. It's not used for any other accounting purposes. This way I don't have to actually go find an invoice to know the year it was sent.

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Tip

... start with at least 5 or 6 digits, using leading zeros. A la 00001, 00002, 00003, etc. You''ll be glad you did this when viewing columns of invoice numbers. It'll make legibility easier if they all have the same amount of actual glyphs.

Answer 3

For work with multiple clients, the best way to keep invoices distinct is through the use of a prefix code, so if I have three clients I might have three invoice 0001's, but with a different notation at the start e.g.

• CN1-00001
• CN2-00001
• CN3-00001

This system allows you to see, at a glance, which invoice you're referencing and, for your own ease of management, which client it refers to. Having a single number system (invoice #001, #002, #003, #004) will eventually bite you on the backside when clients phone you with queries about missing invoices because they've not received them in sequential order.