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Invoicing

What is an invoice number? How to assign (with examples)


Invoice number definition

An invoice number is a unique number assigned to invoices. They allow invoices to be easily identified and tracked for accounting and tax purposes.


When you run a small business and work regularly with other businesses, you’ll likely have many expenses to keep track of. That’s where invoices and invoice numbers can help. When you follow invoice number best practices, your billing system helps streamline cash flow management. 


Invoice numbers appear near the top of the invoice document so that businesses can quickly organize and categorize them. Let’s take a closer look at why invoice numbers are important and how to assign them:

The benefit of using invoice numbers, such as matching payments and invoices conveniently.

Why are invoice numbers important?

Businesses use invoices to inform clients and customers of expenses and request payments they’ve incurred. Unique invoice numbers help you track a variety of factors that are critical for running your business smoothly and profitably:


note icon Invoice numbers help you quickly assess how much money you’re owed, which clients have paid, and the payment history for a given client.


Helps track the money you’re owed

By quickly identifying which invoices haven’t been paid yet, you can see how much money you’re waiting on. This can help you plan your monthly budget, see how much cash you can expect shortly, and assess how quickly you can expect a turnaround on invoicing and payment processing.

Gives insight into customer payment history 

Invoice numbers can help you look at how often a customer has purchased items and when and how quickly they pay. If you notice that a particular client currently has past-due invoices, you may need to follow up.

Allows you to quickly review past transactions

A client may request information about past transactions they made with you—or you might be curious about them yourself. By having well-organized financial records and invoices cataloged thoroughly using your invoice number system, you can quickly and efficiently find any past payment in your system.


An invoicing system lets your business maintain a record of all its transactions. So, if something comes up in the future, it’s easy to look through old invoices to find the source of the issue. 


Consider leveraging bookkeeping experts to help you set up a system for tracking and reviewing invoices.

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How do you assign invoice numbers?

Invoices help businesses keep track of the various payments they can expect while also informing clients about how much they owe. However, to organize this information so it’s user-friendly and productive, there are a few invoice number format best practices you should keep in mind.


note icon QuickBooks automatically assigns new invoice numbers to your invoices. However, you can change the starting invoice number to best suit your billing method.


Here’s how to assign invoice numbers that will keep your invoicing well-organized and easily searchable: 

Start with longer numbers

Simply ordering invoices starting with “1” can get confusing as you scale up your operation. Start with longer numbers for your first invoice and go up from there. For example, you may start with 1001. 

Use identifying numbers

As you sign new clients, assign them a unique identifying number in your billing software. Then, on each invoice sent to that client, append sequential invoice numbers. For example, your first client’s third invoice might be 1003, and your fifth client’s first invoice might be 5001.

Add letters

You can also use letters as identifiers for invoice numbers. Try assigning each client an abbreviation. Let’s say you have a client called Smith Air Conditioning. The first invoice might be SA0001, and future invoices with alphanumeric invoice numbers will continue from there.


note icon Using smart invoice number formats can make it easier to find invoices. Examples include sequential and alphanumeric numbering.



Examples of how to use invoice numbers

Say you own a business that does contract work for other companies. A client hires you for a new project that will span three months. Because the project takes three months, you end up sending your client three separate invoices for payment. To keep your business records clear, you create a numbering system for your invoices that lets you quickly search them if questions later arise.


Here’s an invoice numbering example for assigning numbers for monthly billings: 


  1. SA0001: January invoice number
  2. SA0002: February invoice number
  3. SA0003: March invoice number


Now, six months after completing the project, the client reaches out to request additional work. They reference an invoice with similar work and give you the invoice number. Because of your well-organized invoicing system, you can quickly check your records and offer a quote for the needed work.


note icon Need to get paid fast but don’t need an invoice? You can use QuickBooks payment links to request payment and let your customers choose a payment method that’s convenient for them.


Get paid with less back-and-forth

Invoices and a number system can be created using free invoice templates and Microsoft Excel. However, part of proper cash flow management and tax planning involves employing a smart system for tracking invoices.


Using dedicated invoicing software like QuickBooks to create and track your invoices lets you quickly create professional and intuitive invoices. Clients also have more options to promptly complete payments, including credit cards, debit cards, and ACH bank transfers.

Invoice number FAQ


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