What is an Invoice Number?
Each and every invoice issued is assigned with a unique, sequential code which is called as invoice number. There are numerous invoices and it is difficult to remember each & every invoice. Therefore, to easily identify each and every invoice, a unique number is assigned to it. Invoice number helps in identifying each and every invoice as well as making difference in comparison to other invoices. It also helps in tracking payments. An invoice is not considered a legal document without an invoice number.
Why you need an Invoice Number?
A unique invoice number should always be printed on the invoice to make it different from the other invoices. The sequence number on invoice helps supplier, buyer as well as tax authorities in locating invoices in relation to any given transaction. Invoice number is very useful when you having more than one transaction with the same customer on the same date. With the help of invoice number, tax authorities can easily cross-check invoices against sale & expense records. As per invoicing law in the EU, every invoice should have a unique sequential order identifying the invoice unless it will not be considered as a legal document. Invoice number also helps in finding your old and missing invoices as well as showing status of each and every invoice.
How to build Invoice Number?
Invoice number can be made in many different ways. Different peoples use different methods and even come up with their own sequencing method too. The method used should be consistent, easy to understand while doing audit work. There are two rules which should be followed by each & every company while numbering invoices –
Always use sequential and chronological invoice number
Always use unique invoice number.
There are different methods which are used to number an invoice –
Global sequencing – This method is useful for the companies who don’t issue lots of invoices. In the global sequencing method, you may include the month or year of issue in the invoice number as a part of sequencing. In this method, invoice numbers does not change as per change in client, project or good sold.
Per client sequencing – In this method, invoice number is made as per the client code followed by the numeric sequence. With the help of this method, you can easily differentiate your clients on the basis of invoice number. Some of the companies use identifier related to the project, product or service instead of using a client code. For ex – XYZ012, in this example, “XYZ” represents the client code and “012” is a number sequence attached to it.
Document type – In this method, invoice numbers are not made on the basis of sequence or a client code but on the basis of document type related to your operations. This is considered as a good idea to include document type in the numbering system by starting the invoice number with “INV” or “invoice” & “PROFORMA” in case of Proforma invoices.
Invoice data capture solution – You can capture invoice numbers automatically with the help of invoice data capture solution. Invoice data capture solution catch invoice numbers from OCRed text. Invoice numbers are not always in the number format so that the invoice receiver may not be able to know that which element refers to the document number.
What Nomisma offers – The next invoicing number format is the format which cloud accounting software Nomisma offers to you. Nomisma is one of the best cloud accounting software in UK. With the help of Nomisma software, you are free to select any invoicing format as nomisma cloud accounting software accommodate as per your needs.
Nomisma uses its default system and put numbers on invoices automatically if you didn’t set up your own invoice format. Nomisma cloud accounting software helps companies in choosing any invoice format they desired.
How to assign Invoice Numbers?
Invoice numbers should be assigned in a sequential order. Make sure that your invoice number will go on increasing and it should not be repeated or contains any gap.
A common way to create an invoice number is to include month or year in the invoice number when it is issued. For ex – As we are currently running in 2018 and we have to issue our first invoice in this year, it could be numbered as “180001”, the next invoice numbers would be “180002”, “180003 and so on. When 2019 will begin, we will start numbering our invoices as “190001”, “190002” and so on. By following this system, we can easily track that a particular invoice was issued in which year.
It is not a good idea to number invoices on the basis of numerical only such as 1, 2, 3 etc. as it can lead to confusion, when your invoice numbers will reach double or triple figures. New businesses does not contain much invoices as they have just started the business but it is important that you should choose an effective invoice numbering system unless it will hamper your future growth.
Need of alphanumeric number
Invoice numbers should be alphanumeric means it should not contain only numbers. There is a need to create a unique code with the mixture of numbers, letters & special characters (Slashes (/) or dashes (-)) so that you can easily organize your records & identify invoices. An alphanumeric invoice number series should follow the same rule as regular invoice number series. It should be in sequence and does not contain any gaps. Small abbreviations are used for different types of documents. For ex – “INV” for invoice and “QUT” for quotation number. When you use invoice number series, the abbreviations or letters used will not change, only numbers will go on increasing.Examples of some of the alphanumeric invoice sequences include –
If you want to change invoice number series entirely
If you want to change your invoice number series entirely, you have to wait until the next accounting period. If you will not wait, it will create confusion and increase problems such as missing or duplicate invoice numbers etc.
When a number is assigned to an invoice, it should be unique. If you will assign the previously used number to any new invoice, it will create duplicacy in financial records as well as create confusions & mistakes.
Deletion of invoices
As a standard rule, invoices should not be deleted. If any transaction is completed and company deleted the invoice, it will create a gap in your financial records. Therefore, rather than deleting an invoice, kindly issue a credit note for the same amount. This will effectively cancel out the transaction and will not affect your number sequence too.