What is an invoice number?
Invoice Number Format – An invoice number is a unique sequential code that is systematically assigned to invoices.
Invoice numbers are one of the most important aspects of billing since they ensure that revenues are properly documented for tax and accounting purposes; they also facilitate payment tracking.
Each invoice issued must be assigned a unique invoice number. The invoice number must always be clearly indicated on the invoice – without an invoice number, an invoice is not considered as a legal document.
How to assign invoice numbers
Invoice numbers must be assigned sequentially, which means that the number of each new invoice increases. Legally, a sequence of invoice numbers must never contain repetitions or discrepancies.
It is not a good idea to just number bills ‘1’, ‘2’, ‘3’, etc. This can be confusing when invoice numbers reach double or triple digits. New businesses may not have a large number of invoices to start with, but it’s important to consider future growth when choosing an effective invoice numbering system.
A common way to create a longer and more specific invoice number is to include the month or year when issuing the invoice. For example, in a sequence that refers to the year, the first bill in 2018 can be numbered “180001”. The following invoices would be “180002”, “180003”, etc. At the beginning of a new year, the numbers would be reset. The first invoice number for 2019 would be “190001”.
This system allows you to quickly see what year an invoice is issued and always follows the sequential numbering requirement.
The image below illustrates of Invoice Number Format.
Invoice numbers and deleted invoices
As a standard rule, invoices should not be deleted. Because invoices are numbered sequentially, an invoice that has been completed in your records and is subsequently deleted may appear as a discrepancy in your financial records.
If you want to delete a transaction, it is usually better to issue a credit note for the same amount. This will effectively cancel a transaction, while ensuring that your sequence of numbers is complete.