An invoice number is a specific, sequential code systematically assigned to invoices. One of the essential characteristics of invoicing is invoice numbers, which ensure that income is documented correctly for tax and accounting purposes. They also make tracking payments and managing overdue invoices easier.
How to assign invoice numbers
Invoice numbers are required invoice fields. They should be assigned sequentially so that the number of new invoices increases with each new one. According to the law, an invoice number sequence should never contain repeats or gaps.
It is not advisable to simply number invoices '1', '2', '3', and so on, as this can confuse when invoice numbers reach double or triple figures. Although new businesses may not have many invoices, to begin with, it is critical to consider future growth when selecting an efficient invoice numbering system.
Alphanumeric invoice numbers
It is possible to generate a unique key that includes numbers, letters, and special characters such as slashes (/) or dashes in an invoice number that does not always contain only numbers (-).
So, adding letters and characters to an invoice number series can aid in record organization and invoice identification.
The same rules apply to alphanumeric invoice number series as to regular invoice number series: they must be sequential and never contain gaps.
Letters can be used to distinguish various types of documents, such as quotes and delivery notes. An invoice number sequence, for example, could include 'INV,' while a quotation number sequence could include 'QUT.' If you include letters in your invoice number series, the letters should not be changed; only the numbers should be increased.
Here are some examples of alphanumeric invoice sequences:
When to update invoice numbers?
If you implement an invoice number series that follows the date, keep it updated. Invoice number 'INV-21-12-009', for example, includes the month and year, referring to the ninth invoice issued in December 2021. The first invoice for the following month, January 2022, would be titled 'INV-22-01-001.'
If you wish to change your invoice number series completely, wait until the next accounting period to avoid confusion, skipping, or duplicating invoice numbers.
If you change your invoice number series, ensure no numbers are repeated or excluded. If your last invoice number was '023', your following invoice number must include '024', such as '21/INV/024' or '2021-024'.
Invoice numbers and deleted invoices
In general, invoices should not be deleted. Because invoices are sequentially numbered, an invoice completed in your records and then deleted may appear as a gap in your financial records.
If you want to cancel a transaction, you should usually issue a credit note for the same amount. This effectively cancels the invoice while also completing your number sequence.
Invoice Numbers are critically essential to organize, sorting and managing invoices in the short and long run. When creating an invoice, you have these options: use a free invoice template or invoice generator like Invoice Builder, or use accounting software to create and track your invoices.