Service invoice and tips to be paid faster

By Annapoorna

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Updated on: Apr 20th, 2022

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5 min read

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Service-oriented businesses often have their service invoice template based on which they raise invoices to the customers who have availed those services.

Meaning of service invoice

An invoice prepared and issued by a service-oriented business for its services is called a service invoice. Service invoices help in keeping the business organised and help keep track of services rendered to various clients.

Sectors or businesses that raise service invoices

  • Information technology
  • Education
  • Entertainment and media
  • Event management
  • Professional services
  • Consultancy services
  • Transportation
  • Hospitality
  • Medicine and wellness

How is it different from a typical invoice for goods sold?

  • When it comes to goods, finished goods are sold and delivered, for which an invoice is raised. Service invoices are raised on the completion of services provided. 
  • Invoices for goods sold will normally bear the HSN code for GST purposes. On the other hand, service invoices will bear the SAC code for services rendered.
  • The rate shall be designated by man-hours spent on rendering the service or fixed price per month. 

How does service invoicing work?

  • Service order

The customer first places a service order for a one-time purpose or an ongoing engagement, i.e. a project. Service orders may contain lines for both materials as well as service items.

  • Order confirmation

The next step is the order confirmation, wherein the intimation is given to the customer that the business shall work towards fulfilling the service order so placed.

  • Service sheet

Once the order confirmation is received, the field contractor (who fulfils the service requirements) shall draw up a service sheet. This shall contain all the information relevant to that particular service order. The details will include-

  • Contact information of the field contractor
  • Information regarding the field engineer (supervisor who belongs to the customer’s organisation)
  • Information regarding the approving authority (person who belongs to the customer’s organisation)
  • Service invoice

The service sheets will help fill up the necessary information in the invoice about the services offered and the fee payable for the services provided. This service invoice is then sent to the customer based on the template designed by the organisation.

Contents and format of service invoice template

  • Logo of the business
  • Supplier contact information with GSTIN 
  • Client’s contact details with GSTIN
  • Service invoice serial number
  • Date of the invoice
  • Due date for payment
  • List and description of services provided
  • Terms of payment
  • Total invoice amount
  • Service description and SAC code
  • Tax rate and amount
service invoice

Tips for faster payment and effective service invoice management

  • Request a deposit

For long-term projects, especially, requesting a certain percentage of the fee in advance would be a sensible move. It protects the seller against non-payment while also ensuring that some of the project’s costs are set off against the received amount. The deposit payment also ensures that the business can maintain a steady cash flow to pay certain business expenses.

  • Create a professional service invoice

The design of the service has to be simple yet professional. All the relevant information that is necessary to facilitate quick payment must be included in the invoice. For instance, details regarding the bank account number and the IFSC Code must mandatorily form part of the invoice to make the payment at the earliest.

  • Invoice on time

The sooner the invoice is sent to the client, the better your chances of receiving your payment on time. As soon as the project nears its completion, ensure that the invoice is sent out. This helps since the client will be able to easily recollect the details of the project and drive him to make the payment at the earliest.

  • Set up payment terms

The terms of payment must be agreed upon in advance to avoid confusion regarding the same later on. Make it clear to the client that there will be penalties for delays in the payment and ensure that these terms are enforced in the contract. Outlining all the details regarding the payment also helps you build a better rapport with the client. 

  • Allow more methods of payment

Clients appreciate flexibility. Flexibility also allows the seller better chances of receiving the payment on time. If the services are being availed by the client every month, it is always advisable to talk to the clients and find out what their preferred modes of payment are for convenience. Once this is decided upon, one can also consider the option of recurring billing, wherein payment is automated to a specific date every month. This ensures timely payments to the seller. 

  • Offer incentives for early payment

It bodes well for the business when they make the customer feel appreciated. If a customer makes an early payment, offering them incentives and discounts would go a long way towards building a healthy relationship with them. Moreover, to avail the discount, they will make sure that the bills are paid early every month, thus easing the seller’s burden.

How can ClearOne invoicing software help?

ClearOne invoicing solution is made for every business owner. ClearOne brings a digital revolution in business management to aspiring MSMEs. With ClearOne, you can-

  • Create an impression on your client with professionally designed accurate invoices.
  • Generate, access, share your business documents from the web and mobile on the go.
  • Easily share invoices with your customers and tax professionals.
About the Author

I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more

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