Best Reviews logo
Best Reviews may receive compensation for its content through paid collaborations. See how we sustain our work & review products.
How to Properly Number Invoices

How to Properly Number Invoices

By Zoltán G.Zoltán G. Verified by Adam B.Adam B. Last updated: January 9, 2025 (0)
Table of contents

Keeping track of issued invoices can be quite a challenge, especially if hundreds of them are created each day. Businesses are well aware of the importance of being able to distinguish one invoice from another, which is the reason why bills are always numbered in some way. However, many business owners actually have no idea how a proper invoice number should look. Thankfully, it’s not as complicated as it might seem; in fact, that are various different approaches that can be applied.

How to properly number invoices

Why are invoice numbers needed?

Although it’s worth noting that in the U.S. there are no strict rules regarding the numbering of invoices, there are two things that any decent business should always include in an invoice: the amount due and the invoice number.

While the importance of the former is obvious, the latter is actually a simple way of properly recording each business transaction. This way there’s no chance of creating duplicates and you’ll also be able to refer back to any invoices already issued, which comes in handy if the purpose of an invoice is to correct or cancel a previous one.

And then there are cases where an invoice number is a must. In certain countries invoice regulations are so strict that an incorrect invoice number could lead to serious legal consequences for both the issuer and the receiver.

Invoice status in FreshBooks

The correct way of numbering invoices

As already mentioned, U.S. regulations don’t control how invoice numbers should look, meaning that each business can come up with its own format. But to avoid any confusion it’s best to stick to any of the following approaches:

Sequential

The simplest method by far is to use consecutive numbers – such as ‘0001′, ‘0002′, ‘0003′ etc. – to help differentiate invoices from one another. Not only is this approach simple to remember but it’s also used by most online accounting solutions by default, although it’s worth adding that accounting programs typically apply the advanced form of sequential numbering by adding a prefix to each invoice.

However, it’s worth noting that this prefix – as well as the default numbering of invoices – can be changed any time. In these cases the software will simply adapt to the changes by applying the format used in the last invoice.

Chronological

One of the most straightforward approaches is to add the issue date to the invoice number with the option to choose any kind of date format you deem fitting. In most cases the inclusion of the issue date is often enough; however, using the ‘issue date-client number-sequence number’ format (i.e. ‘01012018-1234-001’) is even better since it helps in identifying the right invoice at just a single glance.

One thing, though: regardless of whether you prefer adding the client’s number to invoices or not, the sequence number always has to be at the end of the bill’s number, otherwise finding the right invoice or differentiating it from others in a sequence would be harder.

60% off Freshbooks for 6 months
FreshBooks logo
Take advantage of Freshbooks's limited-time offer and get 60% off your subscription for the first six months.
Save 60% on Freshbooks

Client-based

Using client-based invoice numbers is a clever amalgamation of sequential and chronological numbering that requires learning only one, crucial rule: the client’s number should come first followed by the issue date and then by the invoice’s sequential number. This way invoices can be distinguished from each other based on the client they have be issued for, making invoice categorization even more streamlined as opposed to just organizing them based on the issue date.

Project-based

Project-based invoice numbers are very similar to those that use specific client numbers to identify themselves. However, the biggest difference is that it uses a prefix that clearly states the project the invoice in question is related to. In other words, any time an invoice for a project is issued the number will be in the ‘project-customer-sequence’ or ‘customer-project-sequence’ format, for example ‘PRO5067-1234-001′.

Just as is the case for sequential invoice numbering, online accounting solutions are also capable of automatically associating the right prefix to invoices that are related to an ongoing project.

Special cases: correction and cancellation invoices

Naturally no one likes making mistakes, especially when it comes to creating an invoice or dealing with business finances. Thankfully, though, putting together an invoice that corrects or nullifies a previous one is not all that complicated since it’s basically an identical twin of its counterpart.

However, there are a few rather important differences:

  • The invoice’s title clearly has to state the purpose it was created for.
  • The new document should include a few lines that contain a reference to the original invoice’s number and issue date.
  • The invoice also needs to show the correct amount to be paid, which in the case of a cancellation invoice can be written as a negative.
  • The most important point to remember is that even though this type of invoice corrects a mistake or change made in the original, it should still be deemed a new invoice and, therefore, should have a new invoice number.

Best online accounting software 2025

Editors' choice
FreshBooks logo
Editor's rating:
(4)
Straightforward design
Simple use
Easy invoicing, projecting
Clever time tracking solution
Small businesses
QuickBooks Online logo
Editor's rating:
(4)
Very good user interface
Over 300 integration options
Different subscriptions with different features
Good Android and iOS apps
Inventory management
Sage Business Cloud Accounting logo
Editor's rating:
(4)
Very detailed summary page
Fully customizable invoices
Intelligent inventory
Check printing by default

User feedback

 Leave a reply

Your email address will not be published. Required fields are marked *


Best Reviews

Best Reviews may receive compensation for its content through paid collaborations and/or affiliate links. Learn more about how we sustain our work and review products.

©2012-2025 Best Reviews, a clovio brand – All rights reserved
Privacy policy · Cookie policy · Terms of use · Partnerships · Contact us