What is an invoice number? Your essential guide

As a small business, you probably need to keep tabs on multiple expenses, and one of the easiest ways to do this is with invoices and invoice numbers. For many businesses, regardless of industry or size, invoice numbers are an essential part of record-keeping and business operations.

Stick with us, and we’ll explore what an invoice number is, why they’re important, and how you can best use them for your business. 

Invoice numbers: in summary

• An invoice number appears on an invoice to identify individual transactions. They’re used by businesses to keep track of trade and save time in finding historical purchases.

• Invoice numbers need to be unique so that it’s possible to find transactions, no matter how old. You can use prefixes and suffixes, numbers and letters to help create unique invoice numbers.

• Tracking invoice numbers can quickly show you how much money you’re owed and by who. 

Defining an invoice number

Invoice numbers are a way of assigning a unique number to an invoice to help you organise and track them, no matter when they took place. Invoice numbers should be easily located whether on paper, email or any other format for the benefit of both you and your customers.

The invoice number means that any interaction post-sale can be intuitively tracked, organised and managed. It can help you find the correct details when a customer calls, and can let you know when accounts need attention. 

Invoices are often sent to clients and customers to tell them when payment is due. It can act like a receipt, listing the services or products provided. 

Where to find an invoice number

Invoices are usually found in an easy-to-spot location on a receipt. This might be at the very top of the page in the header, or near any other essential information, such as the date, or company logo. Most often the invoice number will be titled, making it easier to identify and, if viewing online, searchable. 

• On invoices: Typical locations include the top right, bottom left, or near company details. The invoice number may be highlighted to make it easier to find. 

• On receipts: Invoices on receipts are almost always at the top of the document. Despite this, they can be mistaken for receipt numbers, which is used for different purposes. On a simple receipt, you might find this at the top, but under a name such as ‘Invoice #’ or, potentially, ‘Reference’ or ‘Ref’.

• Within accounting software: Accounting softwares may automatically assign invoice numbers and can be usually found in the system under headings related to customer details or sales made. Also, if you have the invoice number but don’t have any of the other details, you should be able to search using the number alone.  

How to create an invoice number

Creating invoice numbers isn’t as simple as starting with the number 1 and going from there. Instead, you’ll need some structure, especially if you want to prevent things from getting confusing. Start by picking a longer number, something like ‘10001’. For the next invoice, you can follow the numerical order, 10002, 10003, and so on. 

If you already have established clients, or as you begin signing them up, you provide them with a client number that makes them easily identifiable. For example, your first client may have invoices starting at 1000, your second client may be 2000, your third 3000, etc. You can also start using letters to differentiate invoices better.

For example, for a client such as ‘Lee’s Bakery’ you can use an abbreviation such as LB10001, and increase invoices numerically as you go. If you prefer, you can put identifiers at the end of invoice numbers, e.g. 10001LB or 10001-LB.

What else should an invoice include?

Invoices are used by businesses to inform clients of expenses or services used, and to request payments.

Identifiers should be unique, but alongside this each invoice should include:

• The goods or services purchased

• A breakdown of costs for services and items

• The total amount that’s due, along with an expected date of payment

• The terms and conditions of payment

• The name and address of your business, alongside contact information, including a phone number and email address

Tracking your money means using a system that allows you to track your invoices. With the help of an intuitive, scalable system that takes the guesswork out of invoices, you can ensure you’re paid on time. Long gone are the days of keeping client details in a filing cabinet or scrolling through endless emails, with a smart system you can keep track of everything in one useful place.

Invoice number vs. other reference numbers

With numerous ways of identifying clients and their orders it can be confusing trying to understand just what you’re looking at. Keep things clear by reading the below and learn the difference between invoice numbers and the various referencing options.

• Invoice Number vs. Order Number: Unlike an invoice number, which is attached to the financial document, an order number tracks the purchase request made by the customer. For example, if you order a bespoke item, the order number would relate to the specific physical item, but an invoice number would be used to track your payment.

• Invoice Number vs. Purchase Order (PO) Number: PO, or Purchase Order, Numbers are issued by buyers to authorise purchases, for example, if you were buying advertising space in a newspaper on your client's behalf. PO numbers may appear on invoices, but they are distinctly different from invoice numbers.

• Invoice Number vs. Receipt Number: Receipt numbers confirm the payment of goods and services, whereas invoices detail the goods and services along with the due date for payment. 

Why invoice numbers are essential for your business

Invoice numbers play a critical role in your business and are crucial to efficient business operations.

• Legal requirements: VAT-registered businesses are legally obliged to issue invoices with unique numbers. Invoices that don’t feature a corresponding invoice number are not valid for VAT purposes.

• Financial record-keeping: There to facilitate accurate bookkeeping and easier reconciliation, invoice numbers can simplify looking up old records and monitoring transactions.

• Compliance: Sometimes you may need to be able to prove transactions when supporting audits and ensuring adherence to financial regulations. Invoice numbers can make the process easier and allow you to pull up old sales and records.

• Payment tracking: If you have multiple clients all at various stages of the purchasing journey, you may need help keeping track of who owes what when. With invoice numbers, you can simplify the process for monitoring outstanding and paid invoices.

• Error reduction: Errors happen. They’re part and parcel of running a business, but invoice numbers can minimise the chances of duplicate payments or missed invoices within your system

• Professionalism: Invoice numbers are used by businesses big and small, and can contribute to a structured and credible business image. They’re so commonplace, in fact, that customers may be surprised when they don’t get one. 

How QuickBooks helps with invoice numbering

When it comes to invoice numbering, spreadsheets and handwritten numbers soon become cumbersome and unwieldy. But with QuickBooks, invoice numbering is a breeze, so you don’t have to think twice about assigning numbers or tracking who should be given what.

QuickBooks is also highly adaptable, so any existing system can be adopted and integrated into your personalised invoices. Designed to work with the rest of your financial record-keeping, QuickBooks doesn’t silo tasks and integrates systems to provide clarity across all you do.

Learn more about what QuickBooks can do for your invoicing.

Invoice Number FAQs

Can I reuse an invoice number?

No, you shouldn’t reuse an invoice number. Invoice numbers need to be unique and sequential, so that they can be easily tracked as part of the payment process and identified during audits. There may be times when you need to cancel an invoice and resend a new one, but you’ll need to create a new invoice number for the updated version. Be sure to make a note in your system why the invoice was cancelled.

What happens if I make a mistake with an invoice number?

Usually, incorrect invoice numbers will cause some confusion but won’t carry any legal consequences. Instead, to avoid any future errors and misunderstandings for accounting or tracking purposes, you should cancel the invoice with the incorrect number and reissue an invoice with the right number. It’s also useful to include a note in the system explaining the error.

Do I need an invoice number for every transaction?

Yes, you should include an invoice number for each transaction. It’s essential for proper tax and accounting documentation. Invoice numbers should be sequential and distinct, which means you can’t reuse old numbers or group multiple purchases under one invoice number.

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